Amit Dubey(Cyber Expert)

DECODING BITCOIN

Do you know that last week a group of hackers managed to infect the computer network of Los Angeles Valley College (LAVC) in USA with a ransomware and demanded US$28,000 payment in Bitcoins to get it back online? Our cyber expert Amit Dubey explains

Ransomware is a type of malicious software designed to block access to a computer system until a sum of money is paid, it has turned on to a noxious game for Hackers to get paid effortlessly. Ransomware attacks are typically carried out using a Trojan that has a payload disguised as a legitimate file.

In this case, the attack occurred over winter break and caused widespread disruption to online, financial, email and voicemail systems, including locking out 1,800 students and staff from their computers. As the situation went out of control, the Los Angeles Community College District (LACCD) agreed to pay the ransom demand of $28,000 in Bitcoin to criminals and got the decryption keys.

Now other than the ransomware, the thing which attracted me more is the word bitcoin and why the criminals had asked the payment in bitcoins. Today, if I ask the average person what word comes to their mind when they think of a bitcoin, three of the most common responses will likely be “anonymous”, “untraceable” and “a currency for criminals.”

Before we dig into these details, let’s try to simplify the word bitcoin.

Let’s understand the financial transaction world from the beginning. Suppose, I have a 10 rupee note and I want to give that to you. When I handover the note physically to you, you have a 10 rupee note and I have nothing.

Simple Transaction, Right?

As you physically possessed the note and you know the transaction happened, you could touch and feel it.

We didn’t need the verification from any third person. Two of us are sufficient enough to do such a transfer of money. Because you physically hold the money, you don’t need to maintain the records, you can give that money to someone else easily and I don’t need to be in that picture at all.

Now suppose, I have ten digital rupees and here, I’ll give you my digital ten rupees. Now it gets interesting!

How would you know that my ten digital rupees which were mine, is now yours, and only yours? How do you know that I haven’t given that ten digital rupees to someone else too or to many people?

I could have made hundreds of copies of my digital money on my computer.

As you see, this digital exchange is a bit of a problem. Sending digital money doesn’t look like exchanging physical money.

Maybe these digital ten rupees transaction need to be tracked in a ledger. It’s basically a book where you track all transactions –  an accounting book.

This ledger, since it’s digital, needs to live in its own world and needs to have someone in charge of it.

But, how many ledgers will you create, and what if the person who is in charge of the ledger changes his mind and starts cheating people.

Or we keep these records on a server (make him ledger-in-charge) and somebody hacks that system and modifies the entries. This will create lots of problem and it doesn’t seem secure.

What if we gave this ledger to everybody? Instead of the ledger living on a computer server, it’ll reside in everybody’s computers. All the transactions that have ever happened, in digital money, will be recorded in it.

Nobody can cheat. I can’t add or remove anything from ledgers because then it wouldn’t sync up with everybody else in the system. If the distribution of ledger nodes is in millions, it would become a very secure system and almost impossible to beat. This system which I explained just now is called the Blockchain. And the digital money is called bitcoins within the system.

But why criminals are so attracted to Bitcoins? Because block chain stores data anonymously, it assigns the user crypto private key and that is the only identification for that transaction. Anonymous online currencies help criminals to launder massive amounts of money, cross-border transactions and most importantly anonymity, to execute large-scale transactional crime. Bitcoins essentially allow criminals to make peer-to-peer cash transactions at an enormous scale.

But in my view, this happens with any new technology, any such disruption is first used by criminals and then it evolves with time and eventually law enforcement guidelines are put in place. The similar thing, one heard when internet was growing fast, as it gave open communication channel to criminals, they would have made internet an effective tool of committing their crime but today internet seems much secure. It’s an integral part of our lives and an important source of information in our day to day activities.

Of course, innovators are coming up with new ways to increase privacy, on the bitcoin, blockchain and for other types of cryptocurrencies, so law enforcement will continue to evolve and adapt to meet the challenges of new technology. Once this Unique Identification Number gets linked to your address or to your passport, many such problems should be solved, ensuring safe and secure financial world. Let’s welcome this new financial world open heartedly.