Over at CNN.com, they’re reporting that numerous Bitcoin Exchange websites have been under attack, with some of them going offline. The attackers are not yet known, but they’ve been able to cause a lot of headaches and damage as people aren’t able to connect to their favorite exchange websites where they can buy, sell or trade Bitcoin with others around the world.
The attackers are using a flaw in the Bitcoin network to flood the system with fake transactions. As you might imagine, this is causing quite a bit of confusion. Basically, a denial of service attack on the Bitcoin peer-to-peer network, computer engineers who are responsible for working on the Bitcoin code have acknowledged that it’s relatively easy to do this at this time – at least for someone with advanced computer knowledge.
How It’s Happening
As you may or may not know, after each Bitcoin transaction, there’s a ten minute window before the transaction is locked down and finalized. Some nefarious souls are conducting real transactions then flooding the network with fake ones. This caused the accounting functions to become confused.
The problem actually goes back to 2011 when it was first discovered. While most major exchanges took care of the problem right away, a lot of the smaller Bitcoin Exchanges were not updated to account for the problem and this has allowed black hat hackers to do some damage to the network as a whole.
People’s Bitcoin wallets are safe and people are still able to make purchases online with BTC, but the glitch / attack is making it impossible for some to withdraw their funds. In fact, both Bitstamp and Mt.Gox stopped customer withdrawals temporarily while the problem is addressed.
What You Can Do
While this attack on the Bitcoin network doesn’t affect the accounts of individual users, it does bring up the issue of Bitcoin safety. It’s important to never give out your private key. Your public key is public, obviously, but it’s useless without the corresponding private key.
Still, it can be quite frustrating if you have even a little bit of money tied up in Bitcoin and aren’t able to access it whenever you want. Rest assured that a lot of very smart people are working hard to make sure this problem stops and doesn’t happen again, but there will always be those who try to break into or break down any system online.
It does point out the fact that Bitcoin is still relatively new – even though it’s been around for several years now. Some are saying that Bitcoin is still basically in a Beta stage. As with a lot of open source software, however, the Bitcoin mantra has been to release early and release often, fixing mistakes and problems as they’re encountered. This isn’t the way most major corporations work – except maybe for Microsoft – but it’s enabled the Bitcoin software to come a very long way in a short time.
The problems also raise another issue – the fact that Bitcoin is not FDIC insured. This means there’s no guarantees that you’ll get your money back if something does happen and the whole Bitcoin system collapses due to bugs, hackers or other problems. At the same time, this spirit of the Wild West is what attracts a lot of people to cryptocurrency.
Whether the “Gold Rush” period of Bitcoin coin will continue for many more years or months is not yet known, but one thing is for certain – the uncertainty means a chance for making money. And that’s something that is known to attract a lot of people, which could allow the Bitcoin system to grow even more rapidly in the months and years ahead.
Bitcoin security is a big issue currently and will only continue to be so as the prevailing cryptocurrency becomes more popular around the world. As more people join the Bitcoin network, the need for security – and the number of people working on it – is likely to increase. As seen from the problems with Bitcoin exchanges this week, this is something that is desperately needed.
What do you think of the recent hack attack on the Bitcoin network? Let us know by leaving your thoughts in a comment below. When it comes to Bitcoin and other cryptocurrencies, we’re really interested in hearing what our readers think about current events and virtual currencies in general. If you have the time, write a comment and share them with the rest of us.