Hack attacks hit value of Bitcoins

Online services and exchanges dealing in the Bitcoins have been hit by hack attacks that led to a drop in the value of the digital currency

Online services and exchanges dealing in Bitcoins have been hit by hack attacks, which have triggered a drop in the value of the digital currency.

Trading on the MTGox exchange, which handles most trades in Bitcoins, was sluggish as the site came under attack this week. The Intawallet website, used to store bitcoins, was forced offline, according to the BBC.

The value of individual Bitcoins recently hit a record high of almost $147 as interest in the currency – which has no central issuing bank – reached a peak because of concerns sparked by the Cyprus banking crisis, said the Guardian.

But Bitcoins dropped sharply to around $120 as the MTGox exchange came under distributed denial-of-service (DDoS) attacks this week which, combined with high trading volumes, led to delayed trades.

At the same time, Instawallet was forced to shut down indefinitely until it develops an alternative architecture, after hackers accessed its core database.

In a statement posted on the Instawallet site, it said it planned to open a claim process shortly so people could reclaim their Bitcoin balance.

The source of the DDoS attacks is unknown, but MTGox has speculated the attacks were aimed at manipulating the value of the digital currency, according to ComputerWorld.

Attackers could theoretically cash in by selling Bitcoins when values are high and then buying them at cheaper rates after carrying out DDoS attacks that cause the price to crash.

MTGox said Bitcoin owners should not panic and sell off as values fluctuated. The exchange has also promised a more resilient trading platform to be introduced at the end of the year.

The attacks on MTGox came just a week after activists unleashed one of the biggest DDoS attacks to date in support of web hosting company Cyberbunker, after it was blacklisted by anti-spam website Spamhaus.

DDoS attacks typically flood the intended target with large amounts of network traffic in an attempt to render it unreachable.

The attacks on Spamhaus highlighted inherent weaknesses in the crucial domain name system (DNS) that underpins the internet.

Experts have been warning for some time that flooding the DNS with traffic could bring down the internet by making it inaccessible to users.

Raj Samani, chief technology officer for Europe at security firm McAfee, said that, while DDoS attacks are not new, there has been an increase in both volume and sophistication of these attacks, stemming from all parts of the world.

Researchers at Kaspersky Lab warned that attacks of this type are growing in terms of quantity, as well as scale, mainly due to the development of the internet itself in terms of network capacity and computing power, and past failures in investigating and prosecuting individuals behind past attacks.

DDoS attacks, they said, are typically carried out to extort money from targeted organisations or as a weapon to disrupt organisations or companies in pursuit of ideological, political or personal interests.

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