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Digital currency and crime

A type of digital crime called ransomware is making rounds. It is a digital attack impacting the data stored on computers across the world. The stolen data is not retrievable unless a ransom is paid. The concept of attacks and ransom is as old as human civilization is. But now the content and the techniques are hi-tech. Let us look at how the digital assets are held to ransom, how the digital payments are made and how these payments are confiscated by the authorities.

In its simple form, the attackers break into computers belonging to corporations, government institutions etc. and encrypt data residing there. Thus making the data unretrievable unless decrypted. Decryption can only be done by the secret keys provided by the attackers. And they provide the secret keys only when a ransom is paid. For the curious, the secret keys are just a long string of hundreds of characters like “a64xy89mp45…….”.

We come across encryption and decryption in our day to day lives too. For example, whatsapp messages are encrypted on the sender’s phone and decrypted on the receiver’s phone. Similarly, while accessing an online banking app, the information is encrypted at one end and decrypted at the other end. These encryption and decryption processes happen hundreds of times every day on one’s phone and the secret keys are managed transparently behind the scenes. Encryption and decryption are what keep our digital transactions safe.

The same encryption and decryption can be used to perpetuate crimes. Ransomware is rogue software which becomes an unwanted intruder and causes havoc on the victim’s computers. Next comes the question of how these ransoms are paid. They are paid in digital currency, which is outside the purview of any governmental control. An example of a digital currency is bitcoin. Bitcoins do not exist as paper currency. Nor are they like any bank accounts. Nor are they controlled by anyone like governments or companies. They exist as a string of characters on digital wallets in someone’s phone or a computer. Secret keys exist to safeguard the money. The flow of this money cannot be traced easily. If the secret key is lost, so is the money.

The marriage of rogue software and digital currency has seen an increase in digital crimes. Several local governments and corporations in the US have been attacked and ransoms were paid to get back access to one’s data. The attackers, called hackers, sit in other countries like Russia and Iran where they cannot be touched or extradited. Darkside is such a well known hacking group from Russia. I am sure there are other such incidents of ransomware in other parts of the world.

A recent example is a company called Colonial pipeline. It controls more than a thousand mile long pipeline from New York city to the oil fields in Texas. It serves gasoline to most of the east coast of the US. Hackers broke into Colonial’s pipeline recently and demanded a ransom of $5 million. The pipeline was shut down and the price of gasoline spiked up as a result. The company paid the ransom because not paying would be causing them more damage.The hackers also negotiated a price which is not beyond the reach of the victim, but is significant enough to make their efforts worthwhile. My guess is that Colonial had insurance which actually paid the ransom. Soon things limped back to normalcy.

That is not the end of the story. The law enforcement managed to trace the ransom bitcoins and steal it back. The bitcoins are back, but their value diminished while they were sitting on the hackers’ computers. That is because the exchange price of bitcoins is swinging wildly in the markets. The good news is that law enforcement is catching up with the thieves !

Is attack by ransomware preventable ? Yes, if not absolutely, the risk can be minimized. Because such rogue software exploits the known loopholes in software like Microsoft Windows, or Android on phones. Making sure that one has the latest and the greatest software helps. Frequent software updates are issued to plug such holes. Not applying those updates leaves the holes open for intruders to sneak in. And having a good anti virus software, practices such as not using simple passwords, not clicking on any attachments or unsolicited offers, are the antidotes.

Does digital currency have a future ? I think so. It will survive in some form, maybe not bitcoins. Ecuador recently started supporting bitcoins as payments for services and trade. Governments are also toying with their own versions of digital currency. It may not replace the real currency, but is likely to co-exist with it. After all, money is only notional. It has no value if no one is willing to accept it.

 

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Prasad Ganti

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Navneet Bakshi
Navneet Bakshi
1 year ago

As you have said-Cyber crime is as old as computers are. I am reminded of a beautiful story in Book Section of the Reader’s Digest. The person who stole the money from the bank was their own Cyber Security head. He was caught before he could fly off to Panama. We don’t know how safe it is to transact online but it is becoming a necessity. People do not yet know much about crypto-currency but the hackers are already asking for payments in it. The most amusing part of your article was about the law enforcement being able to steal back the ransom paid :). It will be nice really if you write an article about how crypto-currency works. Btw, I have finished reading Hilly-Billy Elegy and liked it very much. It will be so kind of you if you advise me about some interesting books to read.

Navneet Bakshi
Navneet Bakshi
1 year ago
Reply to  Prasad Ganti

Thanks Prasad Ji -I have already read “Educated”. It’s a great book

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