Bitcoin price has been volatie following the WannaCry cyber-attack. Current speculation is that this is related to the fact that the attackers have requested that the ransom be paid in cryptocurrencies such as Bitcoin.
Bitcoin has enjoyed a phenomenal rally in the past few weeks, hitting a record high at $1,800 levels. With each new price record Bitcoin was setting, many wondered whether such a price is sustainable. In recent times, one major dip in Bitcoin’s price came after the rejection of the proposed Bitcoin ETF by the Securities and Exchange Commission (SEC) in March, although its price recovered over the next couple of trading days. This time around, the attackers demanded ransom in Bitcoin. The correlation between Bitcoin and criminals appeared to rapidly affect sentiment about the currency and Bitcoin’s price dropped.
Bitcoin price fluctuations so far in May 2017 (source: Coindesk)
What is Ransomware?
Ransomware is malware that encrypts your files and makes it impossible to access the contents of your computer or system. When such an attack happens, you will be blocked from access to the data unless you pay a ransom. The target PC can be a home computer, endpoints in an enterprise network, or servers used by a government agency or healthcare provider, according to Microsoft in its guide to dealing with the most recent cyberattacks. However, there is no guarantee that after paying the “ransom” everything will be back to usual, and thus experts suggest against paying such money.
Windows computers with Windows Patch MS17-010 are affected by the large-scale ransomware outbreak, which “spreads laterally” and hence its impact is more devastating, according to Redsocks, a malicious threat-detection firm. It is estimated that the cyber-attack has affected more than 200,000 computers across 150 countries with a very short span of time.
As per a Symantec report, ransomware comes in different versions and the one which locked a screen and demanded payment was first seen in 2009 in Russia/Russian-speaking countries. Prior to that, “ransomware was encrypting files and demanding payment for the decryption key.”
Costs & Payments
Ransomware has escalated across the globe as a profit center for criminals, as per Symantec, with a 36% increase in ransomware attacks worldwide in 2016. It further says that the United States was the biggest – and softest – target. Symantec "found 64% of Americans are willing to pay a ransom, compared to 34 percent globally. And the average ransom spiked 266%, with criminals demanding an average of $1,077 per victim."
While the ransomware attackers demand for Bitcoins this time around, payments have been requested in the form of a prepaid card, such as MoneyPak or Ukash (now paysafecash). IT consultancy Sophos suggests in a whitepaper how prepaid cash has been used by criminals: “The ransom message includes a list of locations where the card can be purchased. The associated payment code can then be entered directly into the ransomware, at which point it will be sent to the attacker who can collect the payment.”
In the current case, cyber attackers have opted for Bitcoin because of the value attached to them and the convenience they offer. However, payments made to the Bitcoin addresses are in a way more transparent, as they can be viewed by anyone—to the extent that it’s possible to calculate how much money has been collected by the cyber criminals. Reports suggest that a total of 193 transactions were made by Monday, amounting to around $51,000, which converts to about 30-odd Bitcoin.
Sandeep Goenka, Co-founder, Zebpay, one of India’s leading Bitcoin exchanges, told Investopedia: “Ransomware has existed for more than 20 years. Previously prepaid cards were used. However, Bitcoin is the best payment network out there and so payment methods have changed. Bitcoin, however, is a transparent public ledger and so for the first time, the world can track these payments online, even when the attackers move these Bitcoins. The real story here is not which new payment method is used by the attackers, but how unsecured our networks are."
The Bottom Line
Bitcoin has trended upwards faster than expected and this has been exerting pressure. This has been compounded by anticipatory lifting of ban on withdrawal restriction on a Hong Kong-based Bitcoin exchange, and the ransomware demand. Overall, despite the volatile trend, the fundamentals remain intact and so does the long-term positive outlook towards Bitcoins.