World’s first insured Bitcoin storage service launches after currency battles series of major security breaches
- London-based Elliptic will use ‘deep cold storage’ to secure the currency
- The technique uses both strong encryption and secure physical locations
- The move comes after news that two million computers were last week made into ‘Bitcoin slaves’ after being infected by Yahoo malware
It might be gaining popularity among retailers, but Bitcoin’s reputation as a secure digital currency has taken a hit in recent months.
Only last week, up to two million European computers were compromised after hackers infected them with malware from adverts on Yahoo.
In a well-timed move, London-based Elliptic has today launched the world’s first insured Bitcoin storage service in the UK.
London-based Elliptic has today launched the world¿s first insured Bitcoin storage service in the UK
Named Elliptic Vault, the service claims to use ‘deep cold storage’ techniques to secure the digital currency.
Deep cold storage refers to storage techniques where both strong encryption and secure physical locations are used.
A simple example of deep cold storage is opening a safety deposit box and putting a USB stick containing an encrypted ltc electrum wallet file in it.
‘Securing your Bitcoins involves implementing advanced encryption and even then you are still at risk of losing them,’ said Tom Robinson, co-founder of Elliptic.
Bitcoin is a distributed peer-to-peer digital currency that functions without any central authority, such as the Bank of England
WHAT IS BITCOIN CURRENCY?
Bitcoin is a distributed peer-to-peer digital currency that functions without any central authority, such as the Bank of England.
The currency was launched in 2009 and is traded within a global network of computers.
Bitcoins can be bought with near anonymity, which supporters say lowers fraud risk and increases privacy.
But critics say that also makes Bitcoins a magnet for drug transactions, money-laundering and other illegal activities.
A Bitcoin investor, Norwegian Kristoffer Koch, recently made more than half a million pounds after he forgot he bought £17 of currency four years ago.
The current price of Bitcoin is $840 (£511).
However, its value rose to over $1000 (£613) last year.
The dramatic rise has left many early-adopters with digital wallets worth millions of pounds sitting on their hard drives.
It has also prompted increasingly sophisticated techniques from cyber criminals hoping to ‘mine’ Bitcoins.
For instance, the security breach on the Yahoo homepage last week used malware infected adverts to make computers into Bitcoin slaves.
Other than a slow computer, ltc electrum those infected with the maleware were unaware that their machines were being used to mine Bitcoins.
Experts estimate that these criminal networks generated as much as $100,000 (£60,000) each day over the four day period the malware was active.
Lloyds of London is the underwriter for the Elliptic Vault service which charges a flat fee of two per cent of the value of a user’s deposit.
This means if you want to store £10,000 worth of coins, it will cost £16.67 per month.
The company added that it has seen some demand for the storage of other crypto-currencies, including as litecoin, and is currently looking into expanding the service.
In November, James Howells revealed he had lost 7,500 Bitcoins when he unintentionally threw away the hard drive they were stored on.
But he is now ruing his decision – after he realised his stash would now be worth £5 million.
The Bitcoins, that could make him a millionaire, are now buried under four feet of rubbish and mud in a landfill site.
YAHOO MALWARE TURNS TWO MILLION COMPUTERS INTO ‘BITCOIN SLAVES’
As Bitcoin’s value continues to rise, hackers have found increasingly sophisticated ways to illegally ‘mine’ the virtual currency.
Now a new method has been uncovered which uses malware infected adverts on Yahoo to make computers Bitcoin slaves.
Yahoo has confirmed that the breach took place last week and experts now believe as many as two million European users could have been affected.
In this recent attack, the hackers used malware to exploit something known as ‘Bitcoin mining’.
The mining process works on the premise that there are 21 million Bitcoins hidden across an internet-based network, which are expected to all be found by 2040.
To unearth Bitcoins, computers have to solve the complex processor-intensive equations which hold them.
The more powerful the machine the better it is at solving the riddle.
Bitcoin mining malware is designed to steal computing power to make it easier for criminals to collect the virtual currency, without using their own high-powered computers.
Other than a slow computer, those infected with the maleware be unaware that their machine is being used in what could become known as a ‘bitnet’.
Experts estimate that these criminal networks could be generating as much as $100,000 (£60,000) each day.