Companies stockpiling Bitcoin in anticipation of ransomware attacks

Ransom demand screen displayed by Wanna Cry Trojan

Ransom demand screen displayed by Wanna Cry Trojan

Bitcoin got caught in another media storm this week, though only in a supporting role this time around. The price of Bitcoin fell on Friday, as traders weighed the chance of tighter regulatory scrutiny of what is a crucial enabler of ransomware.

Ransomware is a type of computer virus that encrypts data with a secret key.

Bitcoin addresses are anonymous, but users can be traced through IP addresses or by analysing money flows. Bitcoin can be broken down into 8 decimal places, one can send fraction of bitcoin so any amount money can be represented. And that's only expected to get worse this year.

On an average, 1,000 bitcoins are traded in Indian bitcoin exchanges daily. "Right now the $50,000 extorted from victims is just sitting on the bitcoin network.that [exchange into local currency] is where you're vulnerable to being identified".

A massive cyber-extortion attack known as "WannaCry" wrought havoc across the globe last week, taking out much of Britain's National Health Service and, in a delicious bit of irony, the Russian Interior Ministry.

Ransomware attacks seem to be relatively successful in general.

Cybersecurity experts estimate that the WannaCry ransomware has infected tens of thousands of computers in India, affecting the operations of companies across industries, including banking, insurance, manufacturing, business process outsourcing and retail.

WannaCry, however, has not been almost as successful - or at least not yet.

The malware instructs people to pay up to £460 to one of three bitcoin addresses in order to retain their files, and also displays a countdown clock giving a deadline for the payments. At an exchange rate of $1,700, that adds up to about $68,000 in total gains for the attackers.

The ransom amount ranges from $200 (£155) to $600. They do not feel bitcoin is a legitimate mode of payment.

Ransomware does not technically require bitcoin. Instead, a Bitcoin is worth whatever the market will accept.

Backing up important data is the single most effective way of combating ransomware infection.

Since the attack, Microsoft has responded to the seriousness of the situation by issuing security updates to older versions of Windows that are normally unsupported. Time is also a factor.

"I believe that this was spread for the goal of causing as much damage as possible", said Matthew Hickey, a co-founder of British cyber consulting firm Hacker House, told Reuters.

"Fourteen clients have reached out to me in the last three-and-half days and none of them are ready to pay up in bitcoins for the ransomware attack", said Manan Shah, chief executive of cyber-security provider Avalance Global Solutions.

So what do you do if you receive the WannaCry ransomware message?

The main source of the ransomware problem is not so much Bitcoin, it's insecure computers.

Importantly, just because a victim follows the proscribed steps doesn't mean he or she is going to get their files decrypted. However organizations should ensure that back-ups are appropriately protected or stored off-line so that attackers can't delete them. For a malicious program that's infected more than 300,000 machines, even a low ransom could have resulted a huge payoff. WannaCry initially spread itself through such links. "There is also no guarantee that your files will be released back to you".

"This used to happen in bitcoin before it became big - there were loads of botnets that went into computers that used to mine bitcoin, but you now can't basically mine bitcoin on normal computers because you need specialist hardware", said Chainalysis CEO Jonathan Levin. Law enforcement agencies and network security professionals have been urging victims of WannaCry not to pay the ransom.

With people often the weak spot in cyber-defenses, this is easier said than done.

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