It is not impossible to describe bitcoin, an invisible currency that moves with lightning speed across cyberspace. It may just seem that way. But the fact is that it does take a certain kind of brain to quickly grasp what this new digital currency is, and the path it charts as it moves at astonishing speed across
the web. But one thing that can be easily absorbed is that there has never been anything like it.
Still, despite being a relative novelty to the unschooled, bitcoin and the thousands of new cybercurrencies—yes, thousands—that have sprung up in just the past few years, is not only not going away but may also play a significant role in the way finance is transacted in the future. But, first, a brief look at where bitcoin and its imitators started, a mysterious labyrinth all unto itself.
As near as can be known, Bitcoin’s origins date back to 2008 when a still unidentified group operating under the pseudonym Satoshi Nakamoto introduced the concept. The first Bitcoin transaction followed in 2009 when it was released as open-source software, that is software available to anyone for inspection, modification and with source code open to anyone.
“Bitcoin was invented because a gentleman saw that central governments had complete control over monetary systems,” said Metro State University’s Dr. Alex Fayman. “The goal was to take power away from central governments who have the ability to dictate how much money is printed.” It also has another intriguing selling point, said Fayman, who teaches finance at MSUD. “Paper money has a diluted effect… for the first time we have currencies that are appreciating.”
Of course, while Bitcoin or any cybercurrency may have an enticing, even intoxicating effect on traders, it also has its downsides, and the downsides are now showing up with great regularity on cybercop crime blotters.
In just the last month two major Bitcoin crimes made headlines. The Washington Post reported that in late March cyberthieves stole more than $600 million in cryptocurrency by hacking into a blockchain that powers the video game Axie Infinity. A blockchain is, in effect, the ledger that keeps track of cybercurrency transactions.
An even larger theft was reported a few weeks earlier. In February a New York couple was charged with trying to launder $3.6 billion in stolen Bitcoin. The couple, authorities say, were only slightly more sophisticated than the cyberthieves that stalk the web waiting for any ‘unlocked door.’ Authorities are learning that all it takes to pull off a cyber robbery is the finesse and understanding to click the right keys in the right sequence. More often than not, the ‘getaway’ is successful.
While there are names like Bill Gates or Mark Zuckerberg associated with tech giants Microsoft or Facebook, Bitcoin has none. Its owners are written in invisible ink on invisible paper if they’re written at all. “The People collectively make decisions,” said Fayman. In other words, no one and everyone who plays this modern day trading game owns it. It has, said Fayman, “the very least amount of central control…everything is coded.”
Despite this new cybercurrency’s relative youth and the public’s cursory understanding of it, said Fayman, it is here to stay and growing. For proof, take a quick glance at the growing number of staid and structured financial institutions that are slowly acknowledging not only its power but its future.
U.S. Bank recently announced that its cryptocurrency custody service would now be available to fund managers. BBVA, Morgan Stanley and Wells Fargo are also now in the game.
Bitcoin and the world of cryptocurrency are new frontiers in the financial world and, said Fayman, as they grow, they will require more regulation as attested by an explosion in the number of internet crime reports.
Cybercurrency today is attractive to sophisticated cyberthieves because it is out there and that is not going to change as attested to by the two major crimes earlier in this story. But greed and opportunity have historically inspired crime. That combination remains the inspiration today in the growing world of cybertheft whether it’s identity theft or cyber cash.
It is no surprise that cybertheft has also spawned a boom in the cybersecurity business. It is estimated that U.S. financial institutions will spend as much as $140 billion in 2022 on cybersecurity. While many of these crimes will involve cybercurrencies like Bitcoin, the FBI says a far lesser amount will involve everyday people whose computer files are stolen and, coincidentally, can only be retrieved with ransom paid in cybercurrency.
Still, accumulating wealth however it is gained, has been a hallmark of mankind forever. And a quick method for doing so is playing the cybercurrency game. Is it worth it? “I have invested in Bitcoin,” says Fayman, “also other digital currencies.” But the MSUD finance professor warns that if anyone plans on doing the same, “be very cautious” and spend the time doing due diligence.
Cyber investments can be as good as gold and turn a quick profit. They can as easily turn south. In a word, they are risky. Fayman says when jumping into this new world, ask the same questions that would be asked with any investment. How much risk are you willing to take? Can you absorb the hit if you lose your investment?
