Users storing bitcoin with hardware from a leading data protection company have been urged to update their devices or risk losing funds.

In a company blog post on Friday, Gemini CSO Cem Paya released details of a vulnerability he encountered that allows attackers to brute-force secret keys from SafeNet's brand of hardware security modules, or 'HSMs'.

These tamper-proof, specialist devices are used to safeguard all manner of cryptographic keys for the likes of governments, banks and payment companies. They've been hailed as the 'next step' for bitcoin security.

While testing the SafeNet Luna G5 for use in the forthcoming exchange's cold storage, Paya discovered a design flaw in its software that meant both public and private keys could be extracted – even though they are designed never to leave the device. Clients using any of Safenet's three HSMs to manage their bitcoin keys would be at risk, he said, adding:

"Bitcoin is the one payment technology where possession of money can be boiled down to pure cryptographic capability: generating a signature with an ECDSA private key is money. If you lose control of that private key, you lose the ability to spend your funds, plain and simple."

According to SafeNet, which released a fix last Thursday, the firm rated the severity of the vulnerability as 'high'.

Chris Dunn, VP of technology and crypto management at Gemalto, the company that acquired SafeNet in January, told CoinDesk there have been no known exploits so far. This, he added, was partly due to the specialised nature of the hardware – which can only be accessed by a trusted client.

"Vulnerabilities with the HSM itself are quite rare and difficult to exploit given where and how customers deploy their HSM. The HSM also includes several usage and access control policies that can be used to protect against this type of vulnerability."

Commonly, HSMs are held in air-gapped, covert locations that are only known to select staff members. Certain models are even programmed to self-destruct if they are compromised.

Bitcoin and HSMs

Though the company protects some 750 million encryption keys, relatively few of its 25,000 clients are using these machines to protect their bitcoin.

"We ... have some bitcoin focused customers currently, however this is a new use case for our HSMs," Dunn said.

The devices are still a relatively niche, and costly, product for the bitcoin industry. However, as part of a wider move to traditional security standards – also visible in insurance – venture-backed companies like Gemini and API developer Gem are now utilising these bits of kit as part of their offline (or 'cold') storage solutions.

"There are things [in bitcoin] we can do better than Visa, MasterCard and American Express, but they do a pretty good job of securing private keys. How do they do that? They do that through HSMs," Gem's COO Ken Miller told CoinDesk.

SafeNet Luna SA
The SafeNet Luna SA – an Ethernet-attached HSM server
His company has been vocal about its eight-month integration with Thales, a manufacturer of military-grade HSMs, which required a team of engineers from both companies to create new software that allowed the machines to "speak bitcoin", not RSA.

"We've since found out that a lot of really well-known companies in the bitcoin space have gone down this path and decided not to for that very reason, it's too much work," Miller said, adding that if enough people come knocking, Gem might consider reselling its custom machines.

By contrast, Paya said Gemini did not run into any significant compatibility issues when using SafeNet for bitcoin key storage. "Their HSMs supported ECDSA algorithm as well as the specific bitcoin curve out-of-the-gate without any problems," he said, adding:

"While I'm not familiar with the specific problems Gem face, I can say that each product has a unique set of strengths and weaknesses. Some units we are evaluating did not support bitcoin until recently, while others had OS/software issues that required additional workarounds."

Future adoption

Due to its rarity, Paya said the vulnerability – now patched – does not impact Gemini's plans to use HSMs as part of its back-end security, or Safenet hardware in particular.

"This vulnerability serves as a reminder that sometimes even the additional layers of defence that go above-and-beyond (such as using dedicated HSMs to manage keys) can fail," he said.

However, he added: "HSMs remain the best-practice for managing cryptographic keys."

Gem's COO agreed. While there is no silver bullet for companies to safeguard bitcoin and prevent attacks, the best strategy, he said, was one based on multiple layers of security – including HSM hardware.

"Any hardware or software solution is only going to be as good as the implementation of that solution so it’s critical to be rigorous and thoughtful around the implementation, management, and review of the solution. But having the best available hardware solution is worlds better than not having it."

Russian President Vladimir Putin has issued his first remarks on bitcoin and digital currencies in an educational forum broadcast on domestic TV network Russia 24.

Local news sources including Gazeta, state-operated news agency RIA and TASS are reporting Putin indicated his belief that the Bank of Russia, the country's central bank, has so far taken a reasonable stance on the technology by exploring, not rejecting, its applications.

Further, he suggested that while he considered the use of digital currency as money to be perhaps problematic, the technology could be best considered as a novel way to manage or calculate transactions.

"[Bitcoins] are backed by nothing. This money [is backed by nothing], that's the point, this is the major problem. They are not really linked to anything and backed by nothing," Putin said. "However as an accounting unit, these 'coins' or whatever are they called, they can be used, and their adoption becomes wider and wider. As some kind of unit in some account, probably, it's possible."

Putin continued:

"We do not reject anything, but there are serious, really fundamental issues related to its wider usage, at least, today."

A spokesperson for the president later specified in a separate announcement that he was speaking broadly about digital currency technology, not specifically bitcoin.

"It's the biggest sign of bitcoin legality now in Russia," ICBIT Trading CEO Aleksey Bragin told CoinDesk. "It was not forbidden before, but it was impossible to operate any bitcoin business in Russia (no bank accounts, to start with), and mining was always a gray area."

Other members of the local community saw it as a similarly positive step for a country that has long had one of the most reactionary stances to the technology.

"While Mr Putin didn't say anything concrete about bitcoin legislation in Russia, it's definitely a good sign that our government doesn't want to prohibit something before getting a better insight in the field," Indacoin CEO Stanislav Kosorukov said.

Ivan Tikhonov of Russian-language bitcoin news source BTCsec added his belief that the statements did much to advance the conversation regarding whether their is government support for the technology.

"One thing is certain, no one talked about the fact that bitcoin is prohibited or required to be prohibited," he added.

The announcement follows reports that the country's lawmakers had updated a draft bill aimed at outlawing the use of digital currencies as monetary surrogates.

PERBTC.com rises to the top, offering new deals on Bitcoin purchases

NEW YORK, July 13, 2015 /PRNewswire/ -- PERBTC.com is now offering 12% to 13% above the market value for Bitcoin, and now is the time to take advantage. With the rise in popularity of Bitcoin commerce, many online firms are finding creative new ways to take advantage of this valuable virtual resource. However, none are more market-savvy than PERBTC.com, an up-and-coming financial world star that is taking e-commerce by storm.

Photo - http://photos.prnewswire.com/prnh/20150713/236014

For those not in the know, Bitcoin is the premier virtual currency that is being used online for a variety of purposes, including electronics purchases, travel, and a growing number of online businesses. It allows spenders to take advantage of the convenience and flexibility of online currency, invest, and grow their finances in a totally new way. PERBTC.com is offering unprecedented returns on user investments with their new offer.


Dale Murray, the CEO of PERBTC.com, commented: "We are happy that with this promotional offer we will be able to help the Bitcoin community. By riding on this next wave of digital technology, we hope to become a major leader of the Bitcoin community, and offer exceptional deals for all Bitcoin purchases. It's about staying in-step with the times, and we know that Bitcoin is a wise investment and are confident that it can take us to the top."

A visit to PERBTC.com reveals a cleanly-designed website that is easy to use, making Bitcoin transactions quick and easy. Users only need to enter their email address, and bank or PayPal information and they will be ready to take advantage of this new promotional offer.

Aside from the main page, they also offer a news section and frequently asked questions, which can help new users discover the relevance and importance of Bitcoin, and the subtleties of the trading process. Any further questions on the website can be answered in real time by staff.

Rates are updated constantly, following current market trends, for the most accurate information. Combined with knowledgeable staff and a regularly updated news page, this gives PERBTC.com the edge over competitors in the field by offering a depth of market knowledge that is unrivaled.

PERBTC.com is currently purchasing Bitcoins so any interested sellers should visit their website as soon as possible for the best deals. For more information, visit, www.perbtc.com or call (315) 636-4266.

Media Contact: Batou Jabbi
(315) 636-4266

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/bitcoin-buyer-tops-e-commerce-world-300112522.html

SOURCE PERBTC Group Inc.

Hackers appear to have stolen the entire user database of cloud-based Bitcoin mining outfit Cloudminr.io and are offering to sell 79,267 accounts including passwords for a single Bitcoin.

The Norwegian company's website is offline and criminal advertisements showcasing some of the CSV database of members has popped up on web clipboards like Pastebin. Despite their removal, some are still accessible in web caches.

The account information could be used to access Bitcoin wallets if Cloudminr.io users have made the common error of re-using passwords.

While users have rushed to change passwords, popular review site The Cloud Mining Directory says CloudMinr.io is "most likely an elaborate Ponzi scheme" after initally labelling it possibly the largest Bitcoin mining operations in the industry.

"Cloudminr.io claims they have been hacked, and that is the reason their website is offline. However, it looks like this may have been a Ponzi scheme, and they will never come back online. Until they come back online, I am reducing trust rating to zero," the California-based website says.

That speculation which also exists on the Bitcointalk.org forum cannot be confirmed.

Affected users should immediately change their Cloudminr passwords reused on other sites.

The hack follows the disemboweling of British outfit Bitstamp in January after some UA$5 million worth of Bitcoin was stolen.

The bitcoin price surpassed the $300 mark over the weekend reaching its highest level since 10th March at 15:00 (UTC), according to the CoinDesk Bitcoin Price Index.

Bitcoin's value reached $300.32 at 09:15 on 12th July, spiking to $313.77 at 14:45 on 12th July.

Despite hovering over $300 throughout the whole of Sunday, the price dropped by 4.8% from $304.22 this morning (07:00) to $289.48.

Emerging theories

Bitcoin has been touted as a safe haven asset during times of economic turmoil, which, according to some, has seen the digital currency gain increasing momentum in the wake of the Greek crisis.

Some media reports have suggested Greece's likely exit from the Eurozone could be behind the cryptocurrency's recent price movements as people look to it as a viable alternative to the euro or the drachma – the country's former currency.

Despite a lack of consensus as to whether the Greek crisis has really influenced bitcoin's price movements, it must be noted that today's decline in value coincided with the announcement that Greece had reached an agreement with Eurozone leaders over a possible third bailout.

The agreement is likely to see the Southern European country keep the euro, thus potentially eradicating uncertainty over a future currency and, in turn, reducing the need for people to look for an alternative means of exchange. This could, as a result, have driven today's bitcoin price decline.

Some commentators took to social media to reinforce the connection between the events in Greece and bitcoin's price movements.

A tweet sent from the Twitter account belonging to Charlie Shrem, a bitcoin entrepreneur and the digital currency's 'first felon', currently serving a two year prison sentence for aiding and abetting the operation of an unlicensed money transmitting business, added to the speculation, suggesting that fellow Greek inmates were showing an increased interest in the digital currency.


Looking at the data

Some bitcoin exchanges reported a surge in EUR/BTC trades from Greece in the wake of the country's crisis.

According to Finextra, Bitstamp reported an increase of 79% on their 10-week average, which drew some criticism from redditors who questioned whether the exchange previously had a lot of Greece-based customers.

Whilst other exchanges also reported a notable increase in EUR/BTC purchases from within Greece, these surges could be attributed to the fact that some companies – such as Coinbase –  canceled fees for euro trades in a seeming attempt to drive bitcoin purchases.

According to Bitcoinity, a data website which offers an insight into the trading volumes of the major bitcoin exchanges, the EUR/BTC trading volume reached unprecedented levels in the last six months, peaking on 12th July.

Price predictions

As a highly volatile digital currency, bitcoin's price has previously captivated the attention of both skeptics and enthusiasts in the past.

Just last week, a new report by Wedbush Securities predicted the price of bitcoin would reach $400 during the next year.

At the time of press, bitcoin's price stood at $282.16.

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Bitcoin Is A Major Difficulty For World’s Central Bankers

They are faced with the questions: should they ban it, regulate it, embrace it, or ignore it?

One keen observer says, “Their best bet would be to let Darwinism take its course, and resist the regulatory impulse to interfere with either its survival or ‘death’ and, if it lives, step aside and celebrate innovation not move block its progress.

Bitcoin poses a challenge to central bankers’ exclusive power to print money, no one yet know how they will respond to it.

Reports the European Central Bank (ECB) and the Bank of England (BOE) suggest they are working  keep all options open.

The ECB’s listed central bank views on what Bitcoin is or is not.

Sweden and Finland deny it is a currency. Finland disqualified it as a manner of payment, Sweden taxes it as an asset.

Germany regards it as a unit of account, like the International Monetary Fund’s Special Drawing Rights (SDRs), not legal tender but a form of financial instrument.

The US Fed regards the technology as not “sufficiently mature,” in need of  “further exploration and monitoring”, and that it does not  have the right to regulate digital money.

The ECB’s notes that there are as many as 500 different virtual currency platforms, mostly variations of Bitcoin’s open-source system.

The bank does not say that anyone is using anything other than Bitcoin to make payments. Bitcoin  is a tiny fad in the world of finance. The ECB contrasts the 69,000 daily Bitcoin transactions globally with the 274-M non-cash payment transfers each day just in the EU. It also highlights that in both number and volume of transactions.

Bitcoin is tiny compared to  regular payment systems

The ECB notes that digital currencies currently have fundamental flaws, including the lack of refund rights if your account makes payments not authorized, whether by fraud or accident, plus the existence of what it calls “Scamcoins” designed to fraud participants.

Why users like Bitcoin; cheaper transaction costs, no geographical borders, faster settlement and the anonymity of the system all offer advantages over traditional methods of the money business.

A BOE report follows the central bank orthodoxy of denying that digital currencies can count as money because of their minuscule role in the buying and selling of things.

Their data indicate that digital currencies are primarily viewed as stores of value, and are not usually used as mode of exchange.

It is argued that money is distinct from a long-term asset.

The argument is that people do not  expect the value of money to increase in value over time, and part of the definition of what constitutes money Vs an investment is that money is a medium of exchange. People buy things with money, not with investments.

The conclusion of the BOE’s report is that it may consider introducing its own version of Bitcoin. Saying that the technology involved “may have significant promise.” “A central bank-issued digital currency might be a more easily controlled means of settlement and exchange,” said a senior research adviser at the central bank.

Based on the position of the BOE it is clear the central banks would prefer virtual currencies to fade away on their own. If that does not happen they will move to position Bitcoin and the other digital platforms into existing oversight frameworks, and the apply rules, codification and administration.

Dampening digital currencies in officialdom would then deny their Key attraction to advocates and users, so then with the government blankets, Bitcoin becomes a not issue.

You could adjust the stages a little bit more and apply the model to the current media coverage of bitcoin. Call it the five stages of bitcoin understanding.

1.) Ignore. This is what most major news outlets did for a long time. Bitcoin first came around back in 2009 (but almost no one wrote about it), and it took until 2011 for some mainstream publications to begin to learn about it. But even then, most stayed far away. It was a technology on the fringes, not for serious discussion.

2.) Dismiss. Once mainstream news outlets—both newspapers and magazines—began to take even a minor interest in bitcoin, they began to write stories, but mostly with negative angles of dismissal. “Here’s a new bitcoin company or piece of bitcoin news that may be interesting, but it means nothing because bitcoin will fail, and here’s why.”

3.) Hedge. This is where most news outlets sit today, still—they’ve come to understand that bitcoin is a burgeoning technology that has interest and investment, and they are covering it a bit more often, but when they do, they are careful to hedge their bets by including the downside of, or skepticism around, any news or investment in the space.

4.) Cover. Now some publications are beginning to have dedicated reporters who, rather than writing one piece here and there, are almost exclusively covering digital currency. Most of these are business publications. And even still, the vast majority of sites covering bitcoin aren’t doing so on a daily basis, because they still aren’t convinced that it merits such close coverage. An exception, in contrast to legacy outlets, is a flood of bitcoin-only news sites: chief among them is Coindesk, but there is also CryptocoinsNews, Bitcoin Magazine, and many others.

5.) Write a book. The ultimate expression of believing that bitcoin is here to stay is to write a book on the digital currency. For the first few years of the technology’s existence, there were no books on the topic, but then came a flood. In 2014, hundreds of books were released on the topic (according to Amazon the number is a staggering 437, but that comes from a simple subject search, and likely includes many outliers). Two digital currency reporters from the Wall Street Journal wrote one. A CNBC contributor wrote one. A CNNMoney reporter wrote one. The list goes on. These are people in the media who not only have come to understand the currency, but have gone so far as to devote a book’s worth of reporting and discussion to it. (To read our interviews with some of these authors, see: “The bitcoin book boom.”)

Similarly, there is a quote (often attributed to Gandhi) that bitcoin supporters have adopted as their own, after Cameron and Tyler Winklevoss applied the phrase to bitcoin at the Bitcoin Foundation conference in May 2013: “First they ignore you, then they laugh at you, then they fight you, then you win.”

The 34-year-old CEO of digital currency business Independent Reserve was killed when his motorcycle crashed into a pole in Phuket, according to reports.
The identity of an Australian man killed in a motorcycle smash in Thailand has been confirmed by his colleagues as bitcoin entrepreneur Adam Tepper.

Tepper, CEO of digital currency business Independent Reserve, died on Thursday, his colleague Adrian Przelozny said.

The 34-year-old wasn’t wearing a helmet when he crashed into a pole in Phuket, local media reported, citing police.

Tepper, a keen sailor, had relocated from Melbourne to Sydney after founding Independent Reserve in 2013.

“He will be sorely missed by his family, friends and bitcoin community,” Przelozny said in a statement.

“He lived his life by the beat of his own drum.”

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