Bitcoin will recover from hack losses, claims developer


Bitcoin will recover from hack losses, claims developer

Warwick Ashford

The virtual currency Bitcoin will recover after a hack attack caused its value to drop from $17.50 a unit to almost nothing in minutes, according to one of its senior developers.

The Mt.Gox exchange revealed a hacker had broken into its database and attempted to convert into dollars all of the Bitcoins in a compromised account.

The dumping of the stolen Bitcoins caused the dramatic fall in value, but Mt.Gox suspended trading when the fraud was detected and eventually rolled back to pre-crash rates.

Although the problem was caused by security failings at Mt.Gox, it has raised wider questions about the viability of Bitcoin as a virtual currency.

But Gavin Andresen, a senior developer at Bitcoin, believes the crisis will lead to better security on sites where Bitcoins are bought and sold, according to the BBC.

Bitcoin transactions are made by exchanging anonymous, heavily encrypted codes across a peer-to-peer network which only a specific user can unlock.

But Gavin Andresen concedes current safeguards around Bitcoins may be inadequate as there is no central repository and if an encrypted coin file is deleted, the money is lost.

Earlier this month, Symantec said a trojan - identified as Infostealer.Coinbit - has been targeting Bitcoin digital wallets installed on computers running Windows.

Stephen Doherty, security response engineer at Symantec, said the malware attempts to locate a user's Bitcoin digital wallet file and e-mail it back to attackers.

"If you use Bitcoins, you have the option to encrypt your wallet and we recommend that you choose a strong password for this in the event that an attacker is attempting to brute-force your wallet open," he wrote in a blog post.

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