Bitcoin, a new form of electronic money, nabbed global attention yesterday after a hack attack forced a dramatic fall in its value. After trading as high as $147 just a few days prior, the hack knocked an entire bitcoin service offline “indefinitely,” crippling others as the exchanges fought off hack-related trading lags.
Wait – What exactly is a bitcoin?
In a nutshell, bitcoins are a virtual currency that you can use to buy products online. Bitcoin is not the first currency of its kind, but it is by far the most successful to-date. They’re created through a slow, complicated computer process known as “mining,” and once a person has a bitcoin, he or she can trade it with anyone who will accept it as payment for goods and services (just like US dollars).
As bitcoins have grown in popularity, they’ve also grown in vendor acceptance: You can now purchase music, download magazines, or even upgrade your WordPress account with bitcoins. Still, the currency is not regulated by any central bank, and the entire process is anonymous and untraceable – which means it’s not surprising that scammers are now trying to hack the bitcoin system.
These sound valuable – How do I get one?
The value of bitcoins has been soaring as of late, which is why many news outlets and investors have been taking notice. Still, the entire system is entirely untested, resistant to government regulation, and extremely volatile. On top of that, buying your own bitcoin is a lot harder than it sounds.
The first thing to realize about buying a bitcoin is that you can’t use a credit card, because transactions are meant to be completely anonymous. Your only options are to give up your banking information to a suspicious online exchange (NOT an option), or use a complicated process that includes walking to your local supermarket, using a system like Moneygram to pay a cash-payments service, and then transferring the money through another process that eventually credits your bitcoin account.
For most of us, the best course of action is to sit back and watch the bitcoin drama unfold, but this most recent hack also serves as a reminder of the real-world impact of large scale cyberattacks. No matter how sophisticated the system, no website is invulnerable to attack, which is why it’s so important to follow security best practices in all of your online activities. This includes using a variety of unique, complex passwords – especially for online banking accounts – and keeping security software like McAfee All Access up-to-date.