Everybody's been wondering who hacked Bitcoin investor Allinvain's digital wallet and lifted nearly half a million dollars' worth of the virtual currency this week. A recent discovery by a poster on the Symantec forums recently found out that it might actually not be a who, but a what. According to some source code discovered on an underground forum, a type of malware known as a Trojan horse scans for and steals digital wallet files off of unsuspecting computers. Hackers build and run similar programs to steal credit card numbers stored on hard drives, except stealing Bitcoins is much more lucrative because, like cash, once the wallet is missing, the money is gone for good.
This is essentially what happened to Allinvain earlier this week. As a virtual currency, Bitcoin units are nothing more than pieces of unique code with a monetary value attached to them. Here's a thorough explainer on how Bitcoin all works from The Economist or this animation also does the trick:
Cash money is basically the same thing--a unique code printed on a piece of paper with a certain value guaranteed by the government. However, a major difference is that Bitcoin is not issued by any central bank and, decentralized as such, is inherently anonymous. This is great for programs like a Trojan. On the internet, nobody knows you're a chunk of malicious code.
So when Allinvain left his digital wallet, full of his virtual bills sitting unprotected on his computer's hard drive, it was the geek's equivalent to leaving a stack of Benjamins in a shoebox under a bed. In this case, the Trojan code--Infostealer.Coinbit--sniffs for a Bitcoin digital wallet file on unprotected Windows computers, and if found, emails the file to the hacker by way of a server in Poland. The anonymous theft of an anonymous currency is nearly impossible to track. Hackers have been doing this with credit cards for years, but the identities and institutions involved provide some protection. As Wired points out, Bitcoin-hungry malware is becoming more and more prevalent since the virtual currency stepped into the geek mainstream back in April.
If this all seems kind of irrelevant, it shouldn't. Even if you don't own a single Bitcoin worth of virtual currency, the use of Trojan-type malware for stealing credit cards is becoming increasingly sophisticated. NPR reported Friday that there are now underground markets for hackers to buy and sell credit card information of unknowing consumers. (That's not to be confused with the underground market to buy and sell drugs using Bitcoin.) And as hackers build Bitcoin into their routine, we're likely to see a lot more thefts of all kinds.
This article is from the archive of our partner The Wire.
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