Bitcoin Helps the Ransomware Industry

What do smart watch maker Garmin, insurer Israel Shirbit, electronics manufacturer Foxconn, Delaware county Pennsylvania, foreign exchange company Travellex, alcohol producer Campari and the Baltimore Public School system have in common?

They have all been hit by ransomware attacks in the past year.

Boaz Sobrado is a data analyst based in London and passionate about cryptocurrency.

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Ransomware attacks are when hackers gain access to the victim’s computer systems, and threaten to expose them or render them useless unless the victim pays a ransom. The attacks are increasingly professional. Victims are directed to a “user support” site where they can chat with the ransomware operators. Sometimes they may see a ticking clock: If the ransom is not paid within 24 hours, the amount of the ransom doubles.

The COVID-19 pandemic forced even reluctant companies to start working remotely, which was a blessing for ransomware operators. The average ransom payment in Q2 2020 was over $ 178,000, which is a 60% increase since Q1 2020. Ransomware operators have also improved their methods. While a few years ago attacks were mostly “whore-and-pray,” hackers are now deliberately choosing their targets and adjusting ransom amounts based on what they think those targets can do pay. The ransom is often only part of the cost.

Danish facilities company ISS estimated that a ransomware event in February will cost him between $ 45 million and $ 75 million in IT upgrades and other measures. These ransoms are almost always paid in bitcoin. It is estimated that ransomware operations will cause $ 20 billion in damages this year.

See also: JP Koning – Banned All Ransomware Payments, in Bitcoin or Otherwise

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The ransomware industry is experiencing rapid growth, and governments are increasingly aware. On Jan. 6, the U.S. Federal Bureau of Investigation (FBI) issued a warning to the private sector about Egreror, a ransomware operator that has affected Barnes & Noble, Kmart and Ubisoft. CoinDesk columnist JP Koning has argued for a government ban on companies paying for ransomware, as a way to reduce the incentive for criminals to take part in these attacks. We’re a high profile hack away from ransomware being a topic in mainstream politics.

We’re a high profile hack away from ransomware being a topic in mainstream politics.

The emergence of bitcoin has facilitated crime that was not possible before. Yet there is no reason why using bitcoin for ransom should only be considered for online crime. When an American businessman was kidnapped in Costa Rica in 2018, he demanded (and accepted) his ransom hijackers in bitcoin. Known hijackings for bitcoin are rare at the moment, but it’s only a matter of time until kidnappers understand the product market fit. In fact, bitcoin adoption is growing fastest in countries like in Nigeria, where hijacking has been called a “growth industry.”

Bitcoin ransom payments can enable new types of crime in the real world. In the past, Somali pirates risked their lives for a ransom payment that had to be diverted from a helicopter. In the future, pirates might simply navigate an explosive, remotely controlled ship next to an oil tanker and tweet a photo with a bitcoin address at the shipping company. Autonomous airplanes flying out of Davos approached by autonomous aircraft may threaten to break into the rudder unless requirements are met.

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Bitcoin is a highly liquid, censorship-resistant digital cash. These properties make it attractive to criminals but also pro-democracy activists. The Human Rights Institute promoted bitcoin for its important role in helping protesters in Belarus, Hong Kong and Nigeria. Bitcoin is also accepted as an effective hedge against inflation and government seizure on Wall Street.

While people like US Rep. Rashida Tlaib, Jamie Dimon of JPMorgan and outgoing President Donald Trump continue to criticize digital money, the cat is out of the bag. We live in a world where the re-ordering effects of unauthorized money are obvious, and there is no going back. Ask the CEOs of Garmin, Travellex, Campari or Foxconn.

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