Computer forensics, lab management, and Bitcoin: I don't know if those items belong together, but my sense is that it is a good idea for lab managers to have at least a basic understanding about digital currencies. Alternative forms of currency have always been avenues for theft, fraud, drug sales, and other crimes. Bitcoin is no exception. If you have not already encountered a case involving some sort of digital currency you probably will. Here are just a few "nice-to-know" items of basic information about digital currencies and Bitcoin.
What is digital currency?
Digital currency, sometimes also called cryptocurrency, is a form of money or medium of exchange that is electronically created and stored. Some digital currencies are cryptocurrencies for example Bitcoin, others are not, like the Ven. Like traditional monies, these currencies can be used to buy physical goods and services (1).
What is Bitcoin?
Bitcoin is a form of digital currency that is computer-generated and held electronically. No regulatory agency controls it. Bitcoins aren’t printed, like dollars or euros, they are produced by people running computers all around the world, using software that solves mathematical problems. (2).
How do Bitcoin transactions work?
Bitcoin transactions are sent to and from electronic Bitcoin wallets, and are digitally signed for security. Everyone on the network knows about a transaction, and the history of a transaction can be traced back to the point where the bitcoins were produced. There are no actual physical coins, only electronic records of Bitcoin transactions (3).
How do criminals use Bitcoin?
Bitcoins are popular among criminals because of the anonymity associated with the currency. Although transactions are recorded and published, the identity of the person associated with the exchange is not recorded. This anonymity makes the cryptocurrency popular among criminals.
What was Silkroad?
Silkroad was an on-line illegal drug brokerage organization that used bitcoins and the TOR network for transactions. An undercover investigation brought down Silkroad, but other similar nefarious businesses will likely rise to replace it (4).
What is Mt. Gox and what happened to them?
Mt. Gox was a Japan-based Bitcoin holding and exchange organization that was responsible for approximately 850,000 Bitcoins worth an estimated $474 million dollars. Mt. Gox filed for bankruptcy after claiming that Bitcoins were stolen from them (5).
What prevents double-spending of Bitcoins?
Here is the abstract from a longer paper written by Bitcoin creator Satoshi Nakamoto: Bitcoin is a peer-to-peer version of electronic cash that allows online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. Bitcoins provide a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone (6).
Tutorial - How to Steal Bitcoins.
The following link leads to a tutorial about how to steal Bitcoins. I suggest you don’t try this at home…or anywhere (7): http://www.theverge.com/2013/12/19/5183356/how-to-steal-bitcoin-in-three-easy-steps
References
1. Digital Currency. (March 13, 2014). Wikipedia. Retrieved from http://en.wikipedia.org/wiki/Digital_currency
2. Coindesk. (February 21, 2014). What is bitcoin? Retrieved from http://www.coindesk.com/information/what-is-bitcoin/
3. Coindesk. (March 6, 2014). How do bitcoin transactions work? Retrieved from http://www.coindesk.com/information/how-do-bitcoin-transactions-work/
4. Goldstein, M. (March 4, 2014). Silk Road, Shut down in fall, had digital outpost in Pennsylvania. Dealbook. New York Times. Retrieved from http://dealbook.nytimes.com/2014/03/04/silk-road-had-digital-outpost-in-pennsylvania/?_php=true&_type=blogs&_r=0
5. Farivar, C. (February 25, 2014). Mt. Gox, once the world's largest Bitcoin exchange, shuts down. arstechnica. Retrieved from http://arstechnica.com/business/2014/02/mt-gox-once-the-worlds-largest-bitcoin-exchange-shuts-down/
6. Nakamoto, S. (n.d.). Bitcoin: A Peer-to-Peer Electronic Cash System. Retrieved from https://bitcoin.org/bitcoin.pdf
7. Jeffries, A. (December 19, 2013). How to steal Bitcoins in three easy steps. The Verge. Retrieved from http://www.theverge.com/2013/12/19/5183356/how-to-steal-bitcoin-in-three-easy-steps
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