The restrictive encryption on Bitcoin controls the creation of additional units, as new blocks are only produced when the encryption is solved – we covered the technicalities of Bitcoinʼs blockchain recording in HWM March 2017.
Its availability and growth strongly resembles the effort required for mining of gold and silver in the early days; in Bitcoinʼs case, it takes significant computational power to solve its encryption, and it as a hard upper limit for its total circulation. When it was relatively unknown in July 2010, 1BT (one Bitcoin) was merely US$0.07. As of early June 2017, 1BT is worth US$2,824.99, according to Googleʼs currency exchange rate.
Bitcoin is one of the many cryptocurrencies that exist today, but was one of the first decentralized cryptocurrencies back in 2009. Bitcoin transactions are done user-to-user (without a middleperson), and the ledger of these transactions are held by publicly-run, decentralized Bitcoin servers managed by Bitcoin miners all over the globe.
These ledgers are copied across all servers, making it easy to refer to and keep track of, but extremely difficult to alter. Bitcoins’ security lies in its SHA-256 encryption strength and its decentralized record-keeping. Combined with its transaction transparency and durability, Bitcoin amassed significant intrinsic value in a few short years.
The increase attracted the attention of banks and payment logistics firms (such as Paypal); these services started accepting Bitcoins as payment transactions. If you remember the WannaCry screenshots, you’d realized that buying Bitcoins is as easy is swiping a credit card now.
While Bitcoins allow malicious hackers to collect ransom without a real-world bank account, Bitcoins aren’t truly anonymous because of its meticulous record-keeping nature. To overcome that, they can be laundered by using a ‘tumbler’ th at randomizes your Bitcoins with other users’ BT, or through using multiple e-wallets, and disposable payment addresses. With these tools available, it’s no surprise that any competent ransomware coder would prefer Bitcoin over a more traceable alternative.