Hackers have once again threatened the digital infrastructure of the U.S. economy. Late last week unknown intruders breached the secure firewalls of Bitinstant, resulting in the theft of $12,480. According to Genesis Block, the company’s official blog, hackers launched a "sophisticated attack" that was secured over the weekend. BitInstant claims no personal or transactional information was compromised during the breech; however, online comments suggest personal data may have in fact been leaked. BitInstant was up and running again Monday morning, although limitations to the network slowed transfers and exchanges. Although $12,480 may not seem like a lot of money, the increasing number of cyber attacks on American businesses illustrates a growing vulnerability to the United States economy.
"BitInstant is a payment processor for various Bitcoin exchanges and other merchants." Much like how PayPal processes the transfer of traditional payments and money, BitInstant allows for the transfer and trade of bitcoins. A bitcoin is a Star-Trek style currency that allows individuals to purchase goods and services online. Conceived as a cryptocurrency, the bitcoin is not a physical currency like that of a banknote or coins. And unlike the U.S. dollar and other global currencies, bitcoins are not controlled or created by the State or a central bank. Rather, a bitcoin is a digital currency associated with a series of numbers that is transferred and stored on-line.
People can purchase and use bitcoins in a variety of ways. Bitcoins can initially be acquired by accepting them as payment for goods or services, trading them for money, or taking part in a mining pool. Once bitcoins have been acquired, people can use them anywhere bitcoins are accepted, which include a variety of retailers and travel destinations. Although bitcoins are not widely accepted by most retailers, they made their way into pop culture when it was featured on an episode of CBS’s The Good Wife in January 2012.
Users of the bitcoin currency system believe there are numerous benefits over traditional currency systems such as the U.S. dollar. Supporters of bitcoin argue that because the currency is digital, it can never be lost, stolen, frozen, or seized. Also, because the bitcoin is decentralized, it cannot be manipulated by the state or a central bank, potentially making the value of the bitcoin more stable and reliable in the market. Thus, the bitcoin cannot be devalued over time like the U.S. dollar has been due to periods of quantitative easing.
Despite theories of greater safety and security around the bitcoin, the security breech of BitInstant and other bitcoin transaction processing companies illustrate the bitcoin is not as infallible as many believe. Since 2011, several digital heists of the bitcoin have occurred, with as much as $250,000 being stolen at once. The bitcoin may seem like science fiction, but cyber attacks and thefts are very real with as serious consequences as traditional bank robberies.