There have been many Bitcoin vulnerabilities explored lately; these vulnerabilities are more crucial than we perceived. Recently, Silk Road 2 was hacked where hackers maneuvered transaction malleability exploit to steal Bitcoins of worth $2.7 million. Hackers successfully deceived automatic transaction verification system to get their job done.
This required serious consideration and implementation of sophisticated measures to cope with such concerns. It has been reported that automated customer withdrawals have been restored by Bitstamp lately. The hack caused exchange service to shut down for at least four days. Meanwhile, the exchange service was testing Bitcoin’s automated withdrawal process.
— Matt Jones (@MattJones2401) February 18, 2014
— Joseph Weisenthal (@TheStalwart) February 18, 2014
Jeff Garzik, main developer of the Bitcoin stated that vulnerabilities associated with Bitcoin are much more crucial than we thought. Garzik, in coalition with Bitstamp has been considering issues like automated customer withdrawals along with other vulnerabilities. His efforts are dedicated to upgrade Bitcoin transaction validity and restore Bitstamp accounts.
In midst of the halt, many amendments were made to the software to cope with the issues like automated Bitcoin withdrawals. These changes were tested yesterday; however, more alterations are soon to be witnessed. Gavin Anderson, Bitcoin Foundation Chief Scientist asserted that final fixation process will be completed by next week and everything will be as good as gold.
We live in an era of privacy victimization. To cope with this we explore different tactics and adopt diverse methods to safeguard our privacy and security. One of the newly learned methods includes transactions through Bitcoin. For those who don’t know, Bitcoin is a digital currency with no physical existence. However, its value is much more than the piece of paper we carry along.
Bitcoin is one of the safest transaction methods; because, a transaction through a Bitcoin is untraceable. And this is the reason for its rapid acceptance as a secure transaction method by the Netizens around the globe. We had finally discovered a payment method that was untraceable and secure or it was just a wishful thinking
Bitcoins of Worth $2.7 Million Hacked
With the passage of time, there were many Bitcoin exploits discovered that offered opportunities for the hackers to strike. In addition, a recently discovered incident shook the foundation of Bitcoin acceptance around the globe. Silk Road 2 was targeted by hackers that used transaction malleability exploit to steal Bitcoins of worth $2.7 million. It has been reported that a total of 4474.27 Bitcoins were stolen in the assault that drained Silk Road’s escrow account.
The hackers targeted central escrow service, used by the website to manage Bitcoin transactions (buyers-to-sellers). Hackers targeted a flaw in the system known as transaction malleability bug. Using this bug, any user can make a camouflage for the transfers. This will allow the user to hide the transactions completely and claim same amount of Bitcoin several times. The transaction continues till the user swipe the Bitcoin wallet clean.
Exploiting a flaw that already exists isn’t a rocket science. The approach adopted by hackers was quite basic yet effective. Hackers quite efficiently maneuvered transaction malleability exploit via automatic transaction verification system. Using the system, hackers placed different orders and then requested refunds for the unshipped products.
How Did They Do It
Taking advantage of transaction malleability exploit, hackers skipped transaction ID verification process used by Silk Road; this led them to $2.7 million worth Bitcoins. It has been reported that there were six hackers involved in this act. Hackers first placed different orders with each other and then generated a loop of refund requests. Since the website had an automated refund system running, all their refund requests were entertained.
This incident not only affected Silk Road 2 but also the market value of Bitcoin. There have been many events acknowledged that significantly influenced Bitcoin valuation.
The average price of bitcoin on all exchanges is now 573.98 USD
— bitcoin price (@bitcoinprice) February 14, 2014
Despite of hacking assaults encountered by the platforms that support Bitcoin transactions, Bitcoin value had also been affected as many countries said no to the digital currency. As per some random hypothesis, Bitcoin reign will come to an end as quick as it started. The conclusion for this is yet to be witnessed.
Bitcoin prices dropped?! Thank god I can actually buy some now it was unbelievable before
— feb 21st (@localdruglord) February 14, 2014
Bitcoin’s on Mt. Gox are now trading at $344; Bitstamp $637. So sentiment seems to be that it’s easier to get cash out of MTGX than BTC.
— Robert McMillan (@bobmcmillan) February 14, 2014
Mtgox Bitcoin value is now 345 USD. Gaining 1.9% in last 60 minutes.
— Bitcoin Value (@bitcoinvalue) February 14, 2014