[2017-09-28] North Korean hackers’ attempts to steal bitcoin are a huge wake-up

[Kanapka]

North Korean hackers’ attempts to steal bitcoin are a huge wake-up call

North Korea's attempts to steal bitcoin are a huge wake-up call   North Korea's attempts to steal bitcoin are a huge wake-up call 
10 Hours Ago | 01:02
For years, bitcoin critics have warned us about how the cryptocurrency provides way too much opportunity for criminals to launder money. Even JPMorgan CEO Jamie Dimon slammed bitcoin recently, saying it is a "fraud" that would be shut down at some point. But a recent report that shows North Korean hackers are increasing their attempts to steal bitcoin from South Korea may be the final straw that leads regulators to rein in bitcoin.

The report, from cybersecurity firm FireEye, found three attacks against South Korean cryptocurrency exchanges traced to North Korean hackers between May and July of this year.

"The ability of regimes like Kim Jong Un's North Korea to mine or steal cryptocurrencies such as bitcoin is a new reason to be cautious in treating these commodities as currencies," University of Georgia Professor Jeffrey Dorfman said in an email exchange. "While rogue states have practiced counterfeiting even longer than they have been computer hacking, counterfeiters are easier to catch. Once a cryptocurrency is stolen, it is virtually impossible to stop the new owner from spending it, and doing so in untraceable ways."

In other words, we're no longer talking about hypothetical and faceless criminals anymore. We've all seen the laughing faces of Kim Jong Un and his generals after every new missile test, including last month's most terrifying launch of an intercontinental ballistic missile.

Now, imagine if there was evidence Osama bin Laden had used bitcoin to finance the 9/11 attacks and that information came out in the first few days and weeks after those attacks. Remember the sense of urgency and even legal carelessness that characterized the drafting and bipartisan passing of the Patriot Act after 9/11?

How would the U.S. and other nations rein in bitcoin exactly? And who would do it? The simple answer is for the government to make sure bitcoin is forever treated like a commodity like gold, oil, or even fine art and collectible cars. Criminals and rogue states could still use bitcoin in many ways, but it would be much more cumbersome to use than physical or online cash.

For example, treating it as a commodity would mean that each bitcoin would have to be accounted for and taxed more accurately like gold bars. Those making the argument that bitcoin exchanges need a reserve requirement are also on the right track. That's because by imposing that reserve requirement, shadier bitcoin markets and exchanges would be forced out of the business. That too would further discourage criminal involvement.

Another commodity-like aspect that should be introduced into the bitcoin world is insurance. Just like you can insure jewelry and valuable art, encouraging bitcoin owners to insure their property would add a level of private scrutiny to the market that should also make criminal use that much harder to achieve.

The U.S. Commodities Futures Trading Commission, (CFTC), would be the logical government agency to take on the job of enforcing these changes, but bitcoin is such a major entity now that nothing short of a White House decree with the full backing of the Justice Department and even the Department of Homeland Security could set this process in motion.

"I think digital currency can have a bright future," former CFTC Commissioner Bart Chilton said in an email. "They just have not hit on the correct way to do it with various protections, portability of use, and of security in an underlying value (like commodities do provide)."

Making this change would also mean leaning on countries like Japan, that began accepting bitcoin as legal currency in April, to reverse or add new restrictions to that move. The fact that Japan is most squarely in Kim Jong Un's missile cross hairs, should make that argument somewhat easier to make in Tokyo now that we now of Pyongyang's bitcoin maneuvering.

But it would also mean focusing on the big fish first. A study issued in May by the Center for New American Security calls for law enforcement officials in all countries to prioritize their efforts on catching groups like ISIS, North Korea, and terrorists who are using bitcoin and other cryptocurrencies.

Doing these things could go a long way toward ensuring those innocent investors who are simply trading bitcoin as a commodity don't lose everything overnight. But let's face it, it could also be a huge disruption to bitcoin investors if the cryptocurrency suddenly ceased to be so accessible to criminal entities.

Some major bitcoin bears, like Intellyx president Jason Bloomberg, insist its entire value would be wiped out if criminals could no longer use it easily. This spring, Bloomberg wrote: "the only reason Bitcoin has value to anyone is because of the underlying value as a medium of exchange for lawbreakers. If we could flip a switch and eliminate all illegal uses of Bitcoin, there would be nothing left of the cybercurrency."

Bloomberg may be exaggerating about that; he's at least ignoring the non-criminal advantages of using bitcoin like its very low transaction fees and faster transaction speeds. LIU Post economics professor Panos Mourdoukoutas says the digital currency won't disappear and bitcoin will simply return back to its, "old role: a collectible currency for tech savvy enthusiasts."

The words "collectible" and "enthusiasts" sure sound like the terms we use for commodities like rare coins, fine art, and sports souvenirs, don't they?

And that brings us back to protecting innocent investors. One could make similar arguments about gold coins or diamonds having a special allure for criminals trying to move their money out of the law's reach. But the market has long put an inherent value on gold and diamonds that transcends whatever nefarious purposes they can sometimes serve.

That doesn't mean bitcoin isn't in a significant bubble right now. And the warnings made to bitcoin investors about the possibility of the bubble bursting have been loud and numerous for some time.

But that's a far cry from saying it's worthless as anything but a tool for crooks, terrorists, and rogue dictators. There will be a drop in the value of bitcoin if it were more properly regulated and thought of as commodity, but investors wouldn't lose everything in that process. That seems like a win/win.

https://www.cnbc.com/2017/09/28/north-korean-hackers-attempts-to-steal-bitcoin-are-a-huge-wake-up-call-commentary.html

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[Raxitto]

Report shows that the increase in South Korea's attempts to steal Bitcoin by North Korean hackers serve as a warning to regulators seeking to control digital currency. According to US security firm FireEye, three attacks by North Korea against South Korean brokerage firms were reported between May and June of this year. "The ability of regimes such as Kim Jong Un for mining or stealing cryptocurrencies, such as Bitcoin, is an alert to be cautious in treating these assets as coins," says Professor Jeffrey Dorfman of the University of Georgia.

[Baofeng]

No surprise here. The North Koreans have been isolated and the only way to survived is to have funds. So attacking South Koreans  exchanges and stealing lots of bitcoin would be the logical thing for them to do. They are on the opposing site, so one way to destroy their enemy is to attack their financial systems. I hope that South Koreans would protect their exchanges against such attack. I also read that North Korea is also doing some bitcoin mining so bitcoin for them is like a life saver. They are all relying on it so that they can live be self reliant and remember the West has put a embargo on them.

[Kprawn]

So you saying North Korean hackers are only targeting Bitcoin and not huge sites storing credit card details or other methods

of payment? Selling that information or paying people with these cards on the Black markets? He mentioned 9/11 attackers...

did these people pay for their flying lessons with Bitcoin? All payment options are vulnerable to these hackers, so Bitcoin is

definitely not the exception. {Yes, they single it out, because they want to spread FUD and fear} 

[Coin-Keeper]

Doesn't it come down to taking responsibility for protecting your own coins?  I sleep like a baby with my coins protected via several Trezors.  Surely by now a major online exchange would have setup a physical U2F device key as one required to send funds on multi-key exchange wallets.  No hacker can remotely compromise a physical U2F device key.  Security is what I do!

[thebanker28]

Our world has changes a lot in the past several decades. Bank heists "movie style" now are really for dimwits. ITs all done now from a keyboard.

[btcton]

Doesn't it come down to taking responsibility for protecting your own coins?  I sleep like a baby with my coins protected via several Trezors.  Surely by now a major online exchange would have setup a physical U2F device key as one required to send funds on multi-key exchange wallets.  No hacker can remotely compromise a physical U2F device key.  Security is what I do!

The problem with security for the average consumer is that it takes more effort than simply transacting with other technologies. For a Trezor, for example, you have to have access to the physical device, which means you need to pay for it in order to have a secure store for your bitcoins. Contrast this to something like a bank account for which the bank takes care of everything and you can simply swipe your card in order to purchase products and you can see why this is such a big block for so many people. Opening a bank account also does not cost much, if anything, compared to a Trezor. The trade-off will simply not be worth it for most, and that is a significant problem for expansion, as the alternative would be to have a potentially insecure wallet in exchange for ease of access.