One of the key selling points of cryptocurrencies, in addition to the anonymity it offers, is the blockchain technology that keeps it secure.
Spoken of by many, but truly understood by few, blockchain is the technology behind cryptocurrencies. At a very basic level, recent transactions form blocks of data that join the chain, creating a record that cannot be altered.
The perceived security and the recent sharp rise in price, especially by bitcoin, has put cryptocurrencies on the radar of people who previously may not have considered making such an investment. Indeed, the recent volatility seems to have done little to damped the appetite of some investors.
Can’t be stopped
The online nature of cryptocurrencies has meant that the biggest threat has traditionally been hackers, with one example being the recent theft of around JPY58bn (£388.8m, $545.5m, €439.4m) worth of virtual currency NEM from Japanese exchange Coincheck.
The security around cryptocurrencies and the recent spike in bitcoin’s price, however, have incentivised some criminals to bring virtual crimes to real life.
Virtual currencies can be easily and anonymously transferred. While banks can stop or reverse large transactions made under duress, there is no such facility for virtual currencies, reports newspaper the New York Times.
“This is now becoming more pervasive and touching more law enforcement divisions that deal with organised crime and violent crime on a local level,” Jonathan Levin, founder of Chainalysis, which has worked with several law enforcement agencies on virtual currency crimes, told the paper.
Levin’s company specialises in tracking criminal transactions using data contained in the blockchain.
Held hostage
Many of the in-person attacks have not been made public, but some recent cases have been reported in the media.
In January, a Russian man was held captive in his apartment in Phuket, Thailand until he logged onto his computer and transferred around $100,000 (£71,242, €80,560) of bitcoin to his attackers.
The chief executive of a bitcoin exchange in Ukraine, Exmo, was taken hostage just after Christmas and only released a few days later after the company paid a ransom of $1m in bitcoin.
In November, a Turkish businessman was forced to hand over the passwords to his virtual currency wallets – holding around $3m worth of bitcoin – after an armed gang stopped his car in Istanbul, according to local media reports.
In New York City, a man was reportedly held captive by a friend until he transferred over $1.8m of ether, the second most valuable cryptocurrency after bitcoin.
Crypto-conundrum
The world is still trying to fully get to grips with the concept of virtual currencies and whether it is a fad or a phenomenon. There seems to be as many big-name supporters as there are famous detractors.
Governments the world over have adopted different approaches to dealing with the grey area, some taking affirmative regulatory action, with others adopting a more hand’s off approach.
Interest in bitcoin, in particular, was heightened in late 2017, pushing the price per coin past $19,000 on 16 December, according to exchange Coindesk.
The price hit a low of just under $7,000 on 6 February and currently stands at nearly $10,900.
