LAST month, WannaCry ransomware created havoc in many markets to the extent of crippling hospitals in Britain and Spain.
The ransom money demanded by hackers then was cryptocurrencies.
That incident led to further stocking up of cryptocurrencies for people who did not want to be caught with no virtual coins in case of future attacks.
But this week. it was the cryptocurrency exchanges’ turn to get hacked. The attack was DDoS rather than full-fledged hack, but it did disrupt trading.
DDoS is a distributed denial-of-service attack where multiple compromised computer systems attack a target, such as a server, website or other resources, according to the web. That forces the systems to slow down, crash or shut down and that denies users to services.
Bitfinex, the largest US dollar-based bitcoin exchange and smaller BTC-e was under attack for sometime. The good part is that no client’s money was lost.
Cryptocurrencies, also known as digital and virtual currencies, have been in existence for sometime. They are touted to be the currency of the future and that explains why some are keen to get hold of them and store them in their e-wallets. Over 150 corporations globally accept these coins in exchange for goods and services but the major shift came when Japan accepted it as legal tender in April. That has changed the course for this currency.
This week even Peach Airlines, Japan’s biggest discount carrier, said it would accept cryptocurrencies in exchange for seats on its aircraft, though airBaltic was the first airline globally to accept cryptocurrencies.
Bitcoin, the pioneer of the 700-odd cryptocurrencies, is traded across over 40 exchanges globally. There are no physical bank notes or coins issued by governments. Bitcoin is popular because of the way money can be sent across quickly and anonymously as transactions don’t need to be named openly, though transactions are tracked on an online database called blockchain. Still, they are open to abuse given the controversies in the past of black markets and money laundering.
Despite all that, Bitcoin and other currencies enjoyed what the stock pundits would call a bull run over the past few months.
But after Sunday’s stark rise, the cryptocurrencies have since tumbled as these are extremely volatile currencies and the swings, either up and down, can be large.
The rise was led by Japan’s decision to accept digital currencies as legal tender and those buying into it thought that other countries in Asia will follow suit. Besides, there is a lot of hope of potential uses of these currencies in the future. Some say it will be the currency for online payments but nothing is cast in stone for now.
These are early days for this young currency with some major fine tuning needed as governments are still in study mode for it to be accepted globally.
Bitcoin on June 11 surged to US$3,041 a coin and subsequently fell to US$2,419 as at 6.45pm yesterday, wiping off US$600.
Other currencies have also fallen, be it Ethereum, NEM, LiteCoin, IOTA, or Dash, and the fall is between 1% and nearly 60%.
Experts had warned of the bubble for sometime. In market capitalisation, in just hours it wiped off US$8bil to fall to US$100bil yesterday, though it is still far ahead of the US$50bil recorded a month ago. At US$100bil, it is significantly up from US$20bil at the beginning of the year, according to cryptocurrency tracker CoinMarketCap.com.
How low this bear period will go on depends on market sentiments and a lot of other factors. But just as the stock markets, there will be those who will nibble when prices fall. It is really about investors and their risk appetite. But for the promoters, cryptos are here to stay.