It was not until Thursday morning 13th February 2014 when the Bitcoin Community found themselves at the hands of mischievous hackers. On this fateful day, it was announced that Silk Road had been hacked and an estimated 4.474 Bitcoins were stolen which roughly worth $2.7 million, as per the time of the malicious attack. The heist, as some people term the attack, is said to have been caused by the flaw in the Bitcoin Processing Protocol itself. The protocol is best known as the Transaction Malleability. Silk Road is not the first victim of such attacks. Earlier on February 5, MtGox, which is the largest trading market for Bitcoins alongside other markets, shut down withdrawals of Bitcoins all accounting it to Transaction malleability.
Is Transaction Malleability to be Blamed?
Transaction Malleability is a bug that is in-built in the Bitcoin Transaction Protocol. It is simply when a unique transaction ID is slightly altered before it is confirmed with the rest of the servers. On Wednesday, one of the site administrators attested that a bunch of hackers exploited the Transaction Malleability loophole to withdraw millions of cash from the site just as the administrators were carrying out maintenance that required the huge amount of Bitcoins to be placed in a vulnerable location. Defcon said that, there was complete loss of cash from the escrow holdings. He continued saying that the attack hit them at the worst time as they were planning to re-launch the brand new auto-Finalize and Dispute Center. And this would need the entire Bitcoin community’s full balance in the hot storage as per their projections based on the order finalization volume.
Actually, Bitcoin is an online currency, decentralized, free from either government, group or personal control. Due to this, people all over the world can send this currency to one another without any transaction fee involved and without any 3rd party interference. This is what made Bitcoins ideal for trade in illicit items like drugs and even forged documents. That is why the use Bitcoins is facing strong criticism from various governments. However online selling sites like the Oversock.com has already accepted the use of this currency. FBI shut down the old Silk Road last October and arrested its alleged boss Ross Ulbricht seizing over 144,000 Bitcoins that was valued at $28 million by then. This neverstopped Silk Road momentum as the new Silk Road 2.0 was created. This is the one that was attacked on Thursday.
Although this latest attack has raised eyebrows over Transaction Malleability, the condition has been there since 2011. Experts perceive that, best practices may be employed to eliminate the Vulnerability of Bitcoins. The good news is that, the admins may be able to recover the stolen funds. They have posted a series of accounts they believe to belong to the hackers mostly from France and Australia. The admin has told the users to contribute any tangible information that may lead to recovery of the funds. For the people that lost bitcoins in this heist they will be repaid via credit on all of their fees until the balance is paid back. This is not what a lot of people want but at least it show the commitment to rectify the situation and try to keep the site going. Along with this repayment they are also looking at new ways to handle the processing of payments so this won’t happen again.
If you are unsure about Silk Road and want to wait for it to settle down you may want to check out Agora Market. They have been gaining a good reputation although it is still pretty much the same thing as Silk Road but smaller. There is a site about it here with the Agora Market url.
Remember to always make yourself anonymous!