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Security Breach Leads To Bitcoin Thefts

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Bitcoin has emerged as a fast-growing and highly popular currency. Still, that doesn’t mean that Bitcoin is immune to problems. Indeed, through these early stages of growth and development, the currency has faced and overcome numerous challenges. The Bitcoin Foundation has recently revealed a security flaw on the Android operation system that can allow hackers to steal Bitcoins.

The Android operating system is now the most popular smartphone OS in the world. Given that many Bitcoin traders prefer to use their smartphones for conducting transactions, this means that large numbers of Bitcoin users could be exposed to left by using Android. Indeed, two of the biggest Bitcoin wallets, “Bitcoin Wallet” and “Bitcoin Spinner” have been found to be vulnerable to this security flaw.

In order to secure Bitcoin wallets, software programs on Android use SecureRandom Java to generate random sequences of numbers which are then used to encrypt the wallets. The Bitcoin Foundation, however, found that Android sometimes repeats the numbers generated, which can lead to susceptibility. This problem lies within Android itself, not the wallet programs, so any wallet on Android could be vulnerable.

The Bitcoin Foundation advises people to update their wallets once new versions are available. If your wallet is vulnerable, but the managing company has not yet provided an update to fix the security flaw, we advise you to switch to another wallet, or at least remove your Android app and stop using it for the time being. Once Bitcoins are stolen, they are nearly impossible to recover. According to the Bitcoin Foundation, you should also create a new address with a secured random number generator. Then you should send your Bitcoins to yourself.

This is not the first major security breach to hit Bitcoin. In September of 2012, hackers and scammers managed to make off with over $250,000 dollars worth of Bitcoins. Some 24,000 Bitcoins were stolen, which were valued at about $250,000 dollars. Now, these coins would be worth about $2.5 million! Bitfloor has since been shut down, and many Bitcoin traders lost huge portions of their investment.

On March 20th of 2013, nearly $50,000 dollars worth of Bitcoins were stolen in an attack on the BTC Guild, a major mining pool. This happened during an upgrade of BTC’s software systems, which created a short-term vulnerability. Most of the coins have not been returned, though the software itself has been fixed and the Guild is no longer vulnerable.

Security will continue to be an issue for Bitcoin as security is an issue for every type of currency. Just as you can get mugged on the street and have your wallet stolen, if you are not careful you can lose Bitcoins to hackers and scammers. We thus advise you to closely follow any security developments and act accordingly.

An international financial analyst and writer. He has consulted for the Malaysian government, various MNC's, and other organisations. He focuses on currencies, commodities, and emerging South East Asian markets.

View all Posts by Brian Booker

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