Bitcoin has taken the world by storm, and since its introduction in 2008, it has inevitably faced several controversies. Scammers found a gold mine in the digital currency for many reasons. One of them is the fact that only a few people understand it, which makes it easier to make them believe false promises. Another reason is anonymity – cryptocurrency gives scammers relative ease to cover their tracks.
Lastly, a major reason is that it is largely unregulated. Bitcoin chiefly operates outside of the conventions of a financial system; and this worries regulators as it has the potential to be linked to money laundering, tax evasion, fraud, and terrorist funding.
What are the most common bitcoin scams and how do you spot them?
Fake Bitcoin Exchanges. One popular example for these would be South Korea’s BitKRX, which posed to be a branch of the country’s Korean Exchange (KRX) and claimed to be a platform to exchange and trade bitcoin. Ultimately, it turned out to be fraudulent. There are also those that pretend to be connected with well-known exchanges using apps or fake websites; users are scammed when they log in and their account details are given away. When you are directed to a website, make sure that the URL has “HTTPS” rather than just “HTTP.” Without the letter S, it means that the web traffic has no security and encryption.
Ponzi Scams. Someone promises an incredible return of investment using bitcoin and a lot of people buy in it. Before you know it, someone runs off with all of your money. That’s basically how Ponzi schemes work. At first, victims will be made to believe that it actually works – say, the digits in their bank account are increasing. This will also make them talk about its “success” and convince others to join in. Eventually, calls to the customer service are unanswered, there are technical problems with the website, or the money will be remitted late – among several excuses while your money disappears for good. If you see ads that sound like, “double your bitcoin overnight,” they’re probably scams. How it usually works is you have to send them your money first before they can double it.
Pyramid Schemes. Scammers use bitcoin as a product in pyramid scams. In these schemes, your low initial investment will be multiplied if you invite more people to sign up. After a lot of people have invested their money, the original scammer walks away with all the money.
Malware. Hackers have long been using malware in order to get a hold of other people’s login credentials and account details. Now, it’s being used to drain Bitcoin wallets that are connected to the Internet.
How do you avoid falling into these scams?
As the market shares of Bitcoin take us on a rollercoaster ride, e-wallets, cryptoexchanges, and other cryptocurrencies are popping up. New “crypto” apps offer mining services, exchange services, and even banking services. How will you navigate the potential security pitfalls of cryptocurrency scams?
We will examine some of the various ways bad actors are skimming the coffers of cryptocurrencies and what you as a consumer can do to avoid them.
Cryptocurrency Hack Attacks:
With the era of social media and online news, fake news pushers have it easier than ever to create and spread online cryptocurrency scams by capitalizing on the gold rush. They simply mimic mainstream media web pages with catchy links, “Click here to earn one Bitcoin a day!” which bait users to enter their personal data and credit card information. Always remember, Think before you click! If it sounds too good to be true, then it usually is.
Another popular cryptocurrency scam is specialized phishing lures to penetrate cryptocurrency storage systems, such as mobile wallet apps, online exchanges, or trading apps. For example, Fortinet identified a phishing attack that invited investors to increase their gains by utilizing a trading bot application. The phishing email claimed that this app, Gunbot, automatically traded Bitcoins within set parameters to secure profits for investors. Recipients were encouraged to download the new trading bot, Gunbot attachment, but in actuality, it contained an executable that delivers Orcus Remote Access Terminal (RAT) malware.
RATs allow your computer or device to be controlled remotely. From there, it takes just a few keystrokes for the attacker to gain admin rights, which in turn gives him/her access to account and password information that may be stored in the far reaches of your device’s memory. The attacker may even strike gold if you have any Bitcoins or other cryptocurrencies that are stored on the hard drive.
Mining cryptocurrencies takes a lot of resources and computational power. In fact, electricity is the number one operational cost to a Bitcoin miner. For that reason, nefarious hackers have resorted to “borrowing” resources by spreading Bitcoin-mining malware. Many of the current malware botnets are created to mine Bitcoins, whether they’re injected into computers, smart phones, or IoT gadgets. Although their intent isn’t malicious, it’s still unauthorized use of someone else’s property, and it costs the victim money and slows down the hijacked devices. If your battery is dying faster than usual or your device is running slower than normal, then you should scan your system with updated antivirus/anti-malware software.
Crypto-currencies often store their value in file stores known as e-wallets. Wallets can be compromised, manipulated, stolen, and transferred, just like any other data stored on a computer. Kaspersky Lab recently detected a new attack strain called CryptoShuffler. The technique uses simple copy-and-paste tactics to steal valuable Bitcoins from unsuspecting users, straight out of their wallets. Most experts recommend keeping your value in an offline wallet that can’t be accessed by malware or hackers.
Bad actors create fake e-wallets to take advantage of people new to Bitcoin and other digital currencies as they are less likely to recognize fake apps. Lookout recently discovered three fake Bitcoin wallet Android apps in the Google Play Store that trick people into sending cybercriminals Bitcoins. Some of the apps had thousands of downloads. Fortunately, Google has since pulled them from the store. But more crop up every day as the craze for cryptocurrencies hungers on.
Crypto-currency trojans monitor your computer waiting for what looks like the format of a crypto-currency account number. When it spots one, it “awakens” and replaces the intended account you are transferring value to with their account number. Unless you are aware of the switch, it will be game over if you hit the Send button.
Inherent Programming Weaknesses
Like any crypto implementation, the cryptologic algorithm is almost always far more sound than the program that implements it. In general, blockchaining can suffer from a programming bug or lack of good private key security (or Bitcoin wallets) which will it turn compromise the whole system. So, before you use a cryptocurrency or get involved in a blockchain project, make sure the software programmers are applying secure development lifecycle (SDL) processes to minimize bugs. And, protect your private crypto keys as you would the key to your house, or better yet, your safe.
Known Plaintext Crib Attacks
Good crypto makes the resulting cryptotext look like random gibberish. Theoretically, a crypto-attacker should not be able to figure out what the original plaintext looked like. With any blockchain technology, however, the format of the blocks is not a secret and can be easy to figure out. Certain letters, characters, or numbers are always in the same places in every block. This allows crypto-attackers to “crib” a partial representation of the plaintext in every crypto protected block. Plus, every block is a function of the previous block. This weakens the overall protection of the underlying encryption cipher. If the cipher isn’t weak, it isn’t a huge problem, but it does give attackers a starting edge.
Many security experts wonder if SHA-256, which contains the same mathematical weaknesses as its shorter, very much related SHA-1 precedent, is a concern for Bitcoin and blockchain (both usually use SHA-256). The answer is not right now. SHA-256 is strong enough for the foreseeable future. More importantly, since most of the world’s financial transactions and HTTPS transactions are protected by SHA-256, when someone breaks it, we’ll have far bigger things to worry about than just Bitcoin and blockchains. “Although if you’re planning to make a cryptocurrency or blockchain, start planning for “crypto-agility,” which is the ability to replace ciphers and keep the underlying program,” suggests Roger A. Grimes, from CSO.
Sites Get Hacked
Some of the bigger hacks are ascribed to unscrupulous operators who run away with millions in ill-gotten gains. Other common hacking threads surrounding Bitcoin is how often the centralized website controlling the cyber currency gets hacked. One such example is Youbit, a South Korean Bitcoin exchange that had to file for bankruptcy after criminals stole almost one-fifth of its clients’ holdings in the second major cyberattack on its systems this year.
DDoS attacks against major cyptocurrency exchanges or vaults like Mt. Gox or more recently, Coincheck, can take down whole cryptocurrency systems resulting in either stolen funds or corrupted files that are rendered worthless. Make sure to back up your value into an offline location because an FDIC bail out is not likely to happen. Moreover, always do business with a cryptocurrency website that is well secured and trustworthy.
Researchers have been warning for years about critical issues with the Signaling System 7 (SS7) that could allow hackers to listen in private phone calls and read text messages on a potentially vast scale, despite the most advanced encryption used by cellular networks.
Avoid using two-factor authentication (2-FA) via SMS texts for receiving OTP codes. Instead, rely on cryptographically-based security keys as a second authentication factor, for example Google Auth.
Whether you decide to join the craze or sit back and watch the rollercoaster’s dips and turns, here are a few cyber security tips that will be wise to follow:
Practicing routine cyber hygiene will help you avoid the hidden traps lying wait on the web.
Want to more tips? Read more at InspiredeLearning.
This article by Sarah Pritzker first appeared on Youtubetomp3shark.com.
You might be somewhat familiar with the idea of blockchains, or you might have only heard of the phrase in passing (or you might not have any idea what a blockchain is but thought the article title sounded more interesting than the topic currently being discussed in the meeting your supervisor is making you sit through…). Either way, there are still a lot of questions that you probably have.
What is a blockchain?
How does a blockchain actually work?
Are blockchains really as secure as they claim to be?
Can you invest in blockchain itself?
What is the advantage of blockchain?
Maybe you’re getting more involved and want to delve deeper into the exciting and fascinating world of blockchains. In that case, your questions might be more advanced like:
What programming language is used for blockchains?
Is blockchain open source?
Is blockchain hackable?
Are there other use cases for blockchain beyond bitcoin storage?
Will blockchain change the world?
No matter what your string of queries, the best place to find the answers is always the internet. There are thousands and thousands of videos out there explaining the definition, uses, and inner workings of the blockchain.
I know what you’re thinking. Great! Let’s sift through thousands of videos to find the ones that actually make sense, answer your questions, and give over the information you want in an appealing manner. If that doesn’t sound as much fun as a barrel of monkeys (why would a barrel of monkeys be fun anyway?!), then you’re in luck.
Since we know how interested our readers are in the topic, we’ve aggregated the best videos from across the web that talk about blockchains. From the straight-up definition to the more advanced jargon that most of us will never really understand, check out the 5 most useful blockchain videos out there to help you get started down the path of blockchain wisdom.
Great Blockchain Video #1: What is blockchain? CNBC Explains by Tom Chitty
And here’s why: It gives you all the important information you want to know, starts from the beginning, and explains the entire concept well
There are a lot of blockchain for beginners videos. You’ll recognize them by the names like, what is a blockchain, blockchain explained, or blockchain for beginners. The truth is, though, that most of these videos take a lot for granted, assume you know more than you actually do about the topic, or don’t really explain the concept in a practical way.
And that’s why this CNBC exclusive done by Tom Chitty is our first recommendation for anyone who is just starting out on the learning journey to blockchain technology. If you can understand the accent and overlook the poor wardrobe choices, then you can actually learn a ton from this explanation video. Chitty goes through the ABCs of blockchains, showing the negatives alongside the positive uses for blockchains. He also shows you exactly how it works, why it is so secure, and what future applications might be possible for this technology.
The CNBC video also takes you through the benefits and possible financial ramifications that are involved in embracing this technology. All in all, Chitty does a great job of explaining a complex topic and gives you a lot of food for thought.
Great Blockchain Video #2: New Kids on the Blockchain by Lorne Lantz
And here’s why: Practical ways people are currently putting blockchain to good use and how they will even more so in the future
Aside from the fact that this is a TED talk, which automatically makes it amazing, Lorne Lantz explains exactly how blockchain works quickly and eloquently. He then moves on to break down how blockchain works within the bitcoin universe, something that most people are curious about. Finally, Lantz illustrates how blockchain can be used in other instances. This is not only fascinating, but it is a great way to educate the public about how this brilliant technology can be utilized in the future and within our day-to-day interactions.
Great Blockchain Video #3: Understand the blockchain in two minutes by Institute for the Future (IFTF)
And here’s why: It’s fast and easy to watch but surprisingly thorough for a two-minute video
We all want to know more about various topics like cybersecurity, the effect of drug and alcohol combinations, or depression and prevention. But let’s face it, we’re lazy! And what’s more, our attention spans are shorter than Michael Jordan’s laughable attempt at becoming a baseball star. For this reason, I am highlighting this video from IFTF.
The Institute for the Future does snapshots of interesting topics, trending concepts, and technological advancements that they deem worthy of a closer look. This video on blockchain is just two minutes long, but somehow it manages to explain everything you really need for a cursory understanding of the topic (and even a little more). So, if you’re already antsy just from reading this intro, check out the IFTF blockchain video (you can watch it double speed if you’re that strapped for time!).
Great Blockchain Video #4: How the blockchain will radically transform the economy by Bettina Warburg
And here’s why: Food for thought on a more advanced technology that is offering a safer and more reliable forum for value exchange
Whether you’re a conspiracy theorist, a budding financial mogul, or just someone who thinks it’s really cool to see entire empires brought to their knees by the unlikely underdog (think David and Goliath or Spartans against the Persians), this is a must watch video. Bettina Warburg explains briefly how throughout history we have used various methods to exchange values within our societies. From protection to fish and coins and now to the more advanced banks and digital currencies, the world has always had its way of trading valuables for desired goods.
In this video (yep, another TED talk), Warburg takes us through the process of how blockchain is the next chain in the evolution of value exchange. She expertly breaks it down, so you can see how this makes sense on a sociological, economic, and technological level. What’s more, she demonstrates how blockchain is the safest, easiest, and most reliable method we have come up with yet.
So basically, Warburg’s video shows viewers how blockchain is like a solid, unbreakable safe, which makes it more trustworthy and evergreen than any other transaction method that came before it. I don’t want to spoil the video for you, so just watch it for yourself.
Great Blockchain Video #5: Blockchain: Massively Simplified Richie Etwaru
And here’s why: A fabulous twist
This video starts off seemingly like all other beginner’s guides to blockchain. It talks about the early days of the internet (those dark times of dial-up modems and even earlier ARPAnet packet switching technologies) and quickly fast forwards to show you how kickass technology has become (as if we needed a video to tell us that).
All very interesting stuff, but nothing new. And then Etwaru does something that nobody else we’ve seen so far attempt. He takes blockchain and explains how it can bridge a gap that no other technology has been able to traverse, a gap that is so fundamental to human interactions and our society as a whole that it’s truly a marvel that we’ve gotten this far in history without having a more reliable failsafe for it.
In this video, Etwaru explains that inventions are all about bridging gaps in our society, world, and lives. He then continues on illustrating how blockchain bridges the gap of trust, one of the most core and necessary element of our society, one that holds trillions of dollars on its wobbly shoulders. With his mesmerizing voice, witty personality, and mind-blowing revelation, Etwaru really blows the top off of this simplified concept. And that’s what makes his video on blockchain really stand out.
Blockchain Explained, Expanded, and Explored
So, there you have it. Sure, you could sit there for hours and hours watching video after video, sifting through the crap and suffering through the clunky terminology, but why bother? We’ve rounded up the cream of the crop, the best videos out there, the ones that’ll give you the biggest bang for your buck. In fact, if you just watch these five videos, you’ll:
Of course, if you are a real newbie to the blockchain concept, then here’s some quick information to warm you up to the subject and to ensure you don’t sound like a complete idiot the next time the subject comes up.
Now that you’ve got all this information in your head, knowledge is power. So, get out there and do the best thing anyone can do with a boatload of interesting information; flaunt it in front of your friends.
One of the most intriguing use cases for blockchain is the role it can play in disrupting the financial services industry. Of all the potential use cases for blockchain, financial services are the first and most enduring industry to be disrupted by distributed ledgers and the immutability of transactions.
The financial services industry is, after all, ripe for disruption. Legacy banks weighed down by reams of legislation and outdated data storage architecture are feeling the pinch from upstart fintechs, agile technology companies that have been carving out portions of the consumer financial market - and disintermediating banks in the process - with mobile-friendly, customer-centric applications built on powerful new technology like AI machine learning engines and distributed ledgers.
Blockchain, when stripped to its core value proposition, is a data management system with increased security and scalability than previous models. It is itself a disruptive technology that promises to help legacy banks better serve their digital customers. While regulatory pressure and outdated data architecture are inhibitors to banks innovating, the maturation of cloud technology has finally made it cost-effective for legacy banks to access and leverage new technologies like blockchain. The reduced cost of technological innovation coupled with the digitization of data (as evidenced by the changing needs of consumers) are innervating forces pushing banks to explore the potential of blockchain across the banking supply chain and within every banking channel. Here are three interesting blockchain use cases that illustrate how financial services companies are integrating blockchain to speed up their back-end:
Blockchain Use Cases in the Financial Services Industry
Wells Fargo. Wells Fargo is particularly interested in the securitized home mortgage use case. This has traditionally been quite a cumbersome area for banks and an array of digital-first fintechs have found success disintermediating them by offering better rates and faster pre-approvals. An early member of the R3 Consortium, which is dedicated to building technologies for the future of business transactions on the blockchain, Wells Fargo is well-placed to keep their existing customer base and serve them better through faster, more accurate data management.
Bank of America. One of America’s most popular banks happens to be the bank with the worlds most blockchain patents. While one of the goals is to automate the credit system on an Ethereum blockchain, it is clear that BOA is exploring every functional area of the bank and looking to see which products either A) prove substantial savings in operational cost B) replace loads of technical debt C) best suite their customers going forward. It is a full digitization play looking at efficiencies across the banking stack.
JPMorgan Chase & Co. Another American financial giant has been investing in blockchain for years already. JPMorgan Chase and Co’s research and testing spans many channels of the banking sector, including the expansion of blockchain knowledge and integration across the entire industry in the form of Quorum (an “enterprise-version of Ethereum”) and Interbank (a blockchain-based payment project designed to “speed up the exceptions process” with over 70 other banks signed on).
Many Use Cases, Plenty of Inefficiencies
The plethora of use cases indicates that inefficiencies have run rampant in the banking sector for decades. The physical branch model is falling away as fintechs and future-looking banks are leveraging blockchain technology to meet the needs of today's mobile-first customers. And increasingly, banks are realizing that to craft the most effective blockchain products means connecting with product development and design solutions companies that have the expertise needed to build future-proof applications.
Manju Mohan is the author of this article.
anju Mohan has a background in computer science, economics, instructional design, and UX design. She is the CEO and Co-Founder of Ionixx Technologies – a design, web, mobile and blockchain technologies service provider.
With the popularity (and price) of Bitcoin skyrocketing, new users are wondering “Is Bitcoin Safe?” while early adopters are focusing on securing their new digital wealth. When it comes to the safety of Bitcoin, there is one major consideration: Is the Bitcoin network secure?
What is Bitcoin?
Bitcoin is an alternative peer to peer electronic payment system that relies on ledgers and cryptographic proof rather than trust. Allowing two parties to transact directly with each other, Bitcoin is founded on the following features:
Can Bitcoin be Hacked?
There are frequent reports of hackers stealing millions of dollars in Bitcoin, so it must be pretty easy to hack, right? Not so fast. It’s very important to understand the difference between Bitcoin the cryptocurrency and the Bitcoin blockchain, the technology enabling the cryptocurrency craze. We must also consider the insecurities of crypto exchanges before we arbitrarily decide if the Bitcoin network is secure or not. But be sure to look out for these cryptocurrency scams.
What is the Bitcoin Blockchain?
Digital currency is not a new concept. Before its wide adoption, one of the inherent roadblocks to a successful digital currency was the “double spending problem.” Because the currency is digital, how do you prevent people from simply copy/pasting their money and spending the same $20 over and over? Bitcoin solved this problem with the novel concept of distributed blockchaining for decentralized ledgering and verification of transactions around digital currencies—In short, a kind of online distributed ledger. To dive deeper into Bitcoin and its technology, check out the original whitepaper, Bitcoin: A Peer-to-Peer Electronic Cash System,by Satoshi Nakamoto, the pseudonymous creator of Bitcoin.
The idea is simple. Just as a finite amount of gold exists in the world, only a certain amount of Bitcoin can be mined from cryptoland. Moreover, each electronic “coin” is a chronological series of verified digital signatures, and the history of all transactions for each “coin” must be publicly revealed. By making all transactions public, everyone knows how much Bitcoin each person has. The network of Bitcoin participants reaches a consensus on which transactions are valid based on the balance of each account. In order to hack the Bitcoin network, you would need to control more than 50% of the voting power in the network to validate your own fraudulent transactions.
In Bitcoin’s network, the amount of computing power that you contribute to the network is equivalent to your voting power. As of the writing of this article, the bitcoin network’s computing power (or hash rate in crypto lingo) was 14.7 exahashes per second (for reference, 1 exabyte = 1 billion gigabytes). Google was approximated to have computing power equal to about 0.001 exahashes per second back in 2015. At that point in time, the hash rate of the bitcoin network was about 0.5 exahashes per second (i.e. 500x more than Google).
So can the bitcoin network be hacked? Yes. But you need to amass at least 250x the computing power of Google which will cost you more than the value of the bitcoin you could steal. Good luck with that.
How are People Losing their Bitcoin to Hackers?
To date, no one has been able to compromise the core Bitcoin network. Every major Bitcoin or cryptocurrency hack exploited vulnerabilities in third-party applications, crypto exchanges, or insecure crypto web sites. Third-party applications, crypto exchanges, and websites make it easier for people to interact with the Bitcoin network. Online wallets, or e-wallets, allow you to buy, sell, and store your Bitcoin. If your e-wallet provider is compromised, your account’s password and private key would be at risk, and hackers would be able to transfer money out of your account. This isn’t a vulnerability in the Bitcoin network, but in the third-party application. If you’re interested in some previous hacks/scams involving bitcoin you can check out our blog post from last year on the dangers and pitfalls of bitcoin.
There are also individual accounts getting hacked from tried and true phishing, social engineering, and malware attacks that don’t ever make the news.
How do you Keep your Bitcoin Safe from Hackers? Bitcoin Security Best Practices
Given that the network is cryptographically and mathematically proven to be secure, you should focus on securing the accounts you use to buy, sell, trade, and store your Bitcoin. Follow security awareness best practices so that your username, password, and private key don’t get stolen. If you’re new to security awareness, we have a lot of free resources available as well as some courses for purchase.
You should also consider using a hardware wallet. While e-wallets are more convenient, they are much more susceptible to basic phishing, social engineering, or malware attacks that trick you into revealing your password and private key. Hardware wallets, essentially USB drives with extra built-in security, require you to push buttons on the physical device to confirm a transaction, so a hacker would have to be in physical possession of your hardware wallet to steal your Bitcoin.
It’s unquestionably an eventful time in the world of cryptocurrency and blockchain. If you want to participate in the space, just make sure you’re willing to accept the associated risk and to minimize that risk by doing everything you can to secure your digital assets and identity.
Want to more tips? Read more at InspiredELearning.
This article is written by InspiredELearning