Bitcoin 'will recover' from crash

21 June 2011 Last updated at 19:11 ET

The virtual currency Bitcoin will "bounce back" after a hack attack caused its value to collapse, according to one of its senior developers.

Gavin Andresen said he hoped the crisis would lead to better security on sites where Bitcoins are bought and sold.

Prices on the main exchange, Mt.Gox, fell from $17.50 (�10.80) to almost zero when a large number of stolen Bitcoins were dumped on the market.

Trading was suspended and eventually rolled back to pre-crash rates.

Mt.Gox revealed details of the security breach on June 20 with an announcement on its website.

"It appears that someone who performs audits on our system and had read-only access to our database had their computer compromised. This allowed for someone to pull our database," the statement read.

Around the same time, an unidentified person accessed one of the compromised accounts and sold all of its Bitcoins.

They then attempted to buy the coins again and withdraw them in US dollars.

The fraudster was partially foiled when they hit Mt.Gox's $1000 daily limit.

The decision to reset the Bitcoin rate to a point just before the malicious trades were placed was criticised by some users who had taken the opportunity to buy low.

"Why should everyone who profited from the crash suffer your inability to secure the site?" wrote a user called Elments.

Questionable future

Although the problem was caused by security failings at Mt.Gox, it has raised wider questions about the viability of Bitcoin as a virtual currency.

Continue reading the main story

"Start Quote

Like any start-up, it could change the world but it could also be risk."

End Quote Gavin Andresen Bitcoin developer

"I am sceptical about its longer term prospects," said David Birch, director of Consult Hyperion, a consultancy specialising in electronic transactions.

"There were two things here - the specific bubble (caused by the dumping of stolen coins) and the exchange mechanism."

Bitcoin transactions are made by swapping anonymous, heavily encrypted codes which only a specific user can unlock.

Details of who owns each Bitcoin are distributed across a peer-to-peer network, with no central repository.

If an encrypted coin file is deleted, the money is lost.

The system has proved popular with online criminals, keen to keep their financial transactions secret, although it has a wider, legitimate, user base.

Mr Birch said the fact that so many Bitcoins were traded on a single exchange made it vulnerable to market shocks.

He also questioned the fundamental workings of the currency, saying that its emphasis on anonymity and decentralised nature meant there was little recourse for users when things go wrong.

Bitcoin developer Gavin Andresen conceded that current safeguards around the currency may be inadequate.

"I have been the person saying that Bitcoin is an experiment, so you can have confidence in it as much as you can have confidence in any start-up.

"Like any start-up, it could change the world but it could also be risk," he said.

Powered By WizardRSS.com | Full Text RSS Feed | Amazon Plugin | Settlement Statement | WordPress Tutorials

Teenager held over website hacks

21 June 2011 Last updated at 08:53 ET

A teenager has been arrested in a joint Scotland Yard and FBI investigation into the hacking of websites.

The 19-year-old man was held during a raid at a house in Wickford, Essex.

On Monday the UK's Serious Organised Crime Agency (Soca) took its website offline after it was attacked by Lulz Security hackers.

Scotland Yard would not confirm the arrest was connected but did say that it followed a series of distributed denial of service (DDoS) attacks.

The raid in Essex had been a "pre-planned, intelligence-led" operation, it said.

The teenager was arrested under the Computer Misuse Act and Fraud Act and is being questioned at a central London police station.

He was arrested by the Metropolitan Police's e-crime unit.

A Scotland Yard spokesman said: "The arrest follows an investigation into network intrusions and distributed denial of service attacks against a number of international business and intelligence agencies by what is believed to be the same hacking group.

"Searches at a residential address in Wickford, Essex, following the arrest last night have led to the examination of a significant amount of material. These forensic examinations remain ongoing."

Scotland Yard is co-operating with the FBI as well as Essex Police.

An FBI spokesman said it had no comment "at this time".

Channel 4 News claimed LulzSec may have succeeded in hacking into the database of the 2011 Census, which holds details of every UK citizen who filled out the survey earlier this year.

But the Office for National Statistics has released a statement saying: "We are aware of the suggestion that Census data has been accessed. We are working with our security advisers and contractors to establish whether there is any substance to this.

"The 2011 Census placed the highest priority on maintaining the security of personal data. At this stage we have no evidence to suggest that such a compromise has taken place."

When Lulz Security, or LulzSec, first appeared in May, the group portrayed itself as a light-hearted organisation, bent on creating online fun and Lulz (laughs).

But LulzSec is said to have been planning to establish itself as a rival to Anonymous, the hacking group embroiled in the WikiLeaks fallout.

LulzSec initially targeted US broadcasters PBS and Fox and gaming firms.

But the Twitter page @LulzSec then declared its intention to break into government websites and leak confidential documents.

LulzSec is also suspected of hacking into CIA, Sony and NHS websites.

Powered By WizardRSS.com | Full Text RSS Feed | Amazon Plugin | Settlement Statement | WordPress Tutorials

Mobile firms can trade spectrum

21 June 2011 Last updated at 06:08 ET

UK regulator Ofcom has given phone operators the green light to trade spectrum in a move intended to increase mobile network capacity.

Available bandwidth is becoming a huge issue as smartphones put increasing demand on networks.

The trading of airwaves comes ahead of a crucial spectrum auction next year that will usher in 4G data services.

Both the auction and the decision to allow operators to trade existing spectrum have caused controversy.

Spectrum trading allows operators to sell off the airwaves they own in the 900MHz, 1800MHz and 2100MHz frequency bands.

Historically the 900MHz slice of spectrum has belonged exclusively to O2 and Vodafone because they were the only two mobile operators on the market when it was handed out.

While other nations have reallocated this spectrum to offer a more level-playing field ahead of 4G auctions, this has not happened in the UK.

Ofcom had originally planned to redistribute the spectrum allocated to O2 and Vodafone, but was met with a legal action, initiated by the two operators.

Lifeblood

Ofcom dropped its plans following the merger of T-Mobile and Orange.

Everything Everywhere (EE), the parent company of T-Mobile and Orange will be the biggest beneficiary of spectrum trading.

It was required to sell off about 19 percent of its spectrum frequencies as a condition of the merger.

Three is unhappy as it has the least spectrum to trade.

"Spectrum is the lifeblood of smartphones and the mobile internet and for those with surplus holdings it is also a strategic asset, so voluntary trading is the exception," it said in a statement.

"This move simply allows those who have been gifted access to public spectrum to profit from it, with no benefit for UK taxpayers."

Three will voice its concerns later today at a Department of Culture select committee hearing set up to discuss the way spectrum is being allocated.

Further delays

O2 and Vodafone are unlikely to sell off any of their assets, according to Mr Howett.

"It is simply too valuable to them and they would only trade it if they were forced to," he said.

What may force their hand is the upcoming 4G auction in which Ofcom has set caps on the amount that can be bought.

It will mean the operators with more existing spectrum will be able to buy less of the more valuable 4G airwaves.

Ofcom has also ring-fenced some of the spectrum for new entrants such as Three.

"It has done this because it recognised that 3 might not be able to survive and it values the disruptive nature of a player like 3," said Mr Howett.

But O2 said it was tantamount to "state aid" and has threatened legal action.

Any further delays to the auction could put the UK behind other European countries in the roll-out of 4G services, said Mr Howett.

4G will be crucial as the market continues to grow.

According to Ofcom there are now 80 million mobiles in the UK, 12.8 million of which are smartphones.

Powered By WizardRSS.com | Full Text RSS Feed | Amazon Plugin | Settlement Statement | WordPress Tutorials