Bitcoin Hacker Exploits Weakness, Then Returns BTC to Rightful Owners

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As the holiday season gets into full swing, it is customary for those, like me, lucky enough to have a public forum for our opinions, to focus on the good. We should, convention says, find a nice, warm, fuzzy story to write; something that is devoid of controversy and which highlights the good in humanity. Bitcoin, as a subject, doesn’t lend itself to that. The problem is that those who follow crypto-currencies mostly fall into one of two camps.

There are those that are somewhat fanatical, seeing Bitcoin as a cure for all of society’s ills and refusing to countenance any outside criticism, no matter how reasoned or mild. Then there are those that are implacably opposed to the idea of virtual currency. For them any suggestion that Bitcoin or altcoins are anything but a nefarious plot to rob the poor unsuspecting public of their hard-earned, government-issued money is anathema.

Surely, though, at this time we can all appreciate a story that shines a light on the fundamental good in humankind, and such a story developed this week. Details began to emerge of what really is a quite remarkable tale. One that, in keeping with the holiday spirit, reminds us that there are good people out there, and at the same time indicates why Bitcoin has survived its early days and will continue to gain ground.

A while ago, a hacker found a potential weakness in the security of some wallets, involving using a particular code more than once. Last week he was able to exploit that weakness and remove 267 BTC from wallets at Blockchain that had been compromised. Nothing new there, you might say. Computer fraud is an increasing problem, and one that has reached epidemic proportions in the world of conventional currency, where Norton estimated that, in 2012, one and a half million people were victims every day. No surprise, then, that Bitcoin has its share.

What is remarkable, though, is what happened next. The hacker, who goes by the name “Johoe” on Bitcointalk, returned the money to its rightful owners and set about explaining to them and Blockchain how to avoid such an attack in the future. White hat hackers are nothing new, but to go to the bother of returning money and explaining the problem when the anonymity of the hacker is guaranteed hints at one of the biggest advantages that Bitcoin has. The people who use it love it and will protect it however they can.

All currencies are, to some extent, dependent upon trust. The trust implicit in a peer to peer system, though, is more obvious. Policing, regulation such as it is, and protection of value are all in the hands of Bitcoin’s users. When stories such as Johoe’s emerge, that trust appears justified. I am sure that most followers of crypto-currencies were aware of the story; the above referenced article was on Coindesk, so hardly hidden from view. What strikes me, though, is that it stayed there, receiving virtually no coverage from the mainstream media who so delighted in reporting the Silk Road and Mt. Gox sagas. When virtual currencies face the problems endemic in fiat currencies, it seems, that is news, but when they differentiate themselves, it is irrelevant.

I have, in the recent past, written somewhat scathingly of those who see Bitcoin as an ideology. Their passion remains an obstacle to the wider acceptance of the coin, in my opinion, but that, or at least some degree of passion, does result in actions taken for the good of the community. As news of that seeps out and trust is increased it can only be good for Bitcoin’s future.

I understand that there have been criminal hacking attempts, and some successful ones, associated with Bitcoin as well, but that is inevitable for anything of value. What differentiates the crypto world, however, is that for now policing and controlling that situation is in the hands of experts who care. In the case of fiat currencies, on the other hand, it is the responsibility of politicians. I know who I would rather trust.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Forex and Currencies , Investing Ideas , Technology

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Martin Tillier

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