Scam of the day – June 22, 2016 – Virtual currency hacked

Digital funds, sometimes known as cybercurrencies, the most famous of which is the Bitcoin, have been fascinating people in recent years.  These cybercurrencies are presently used for both legitimate and criminal enterprises and bring speed and privacy to financial dealings.  Their lack of governmental regulation provides opportunities both to innovators and, unfortunately to hackers, such as those who hacked Mt. Gox, the largest Bitcoin exchange which lost almost a half a billion dollars worth of Bitcoins in 2014.  Now more than fifty million dollars worth of the digital currency Ether was stolen from a project known as the Decentralized Autonomous Organization (DAO) which was acting like a venture capital fund from which Ether funds would be invested in projects chosen by people contributing to the project.    The hackers used a technique known as a “recursive call vulnerability” to steal the funds.  Fortunately, however, it appears that the stolen funds have been frozen and should be able to be recovered although it appears that this may be the end of DAO as an operation.

TIPS

As worldwide banks continue to struggle with security in a world where banking is done electronically and funds can be stolen by way of computer attacks done through a combination of spear phishing and sophisticated malware, many banks have been looking to the underlying blockchain technology used by Bitcoin, Ether and other cybercurrencies.  However, with the vulnerabilities of blockchain being exposed in hackings such as that of DAO, the search goes on for more secure ways to do online financial transactions, particularly banking.  The present banking system is extremely vulnerable and you can expect there to be many more cyber bank robberies such as occurred most recently at the Central Bank of Bangladesh, not just in third world countries, but in other countries with even more established  and seemingly secure banking systems in the near future.