Reports indicate that Maastricht University paid a couple of hundred thousand euro ‘ransom’ to the cybercriminals who locked down the university just before Christmas, and having done so, received the key to gain access to its systems again. Supposedly, the amount was paid in bitcoins, the currency hackers like to deal in. Why is cryptocurrency so attractive for criminals?
“Criminals won’t want the amount in euros to be transferred to a bank account,” says Paulo Rodrigues, Assistant Professor of Finance. “After all, the bank knows the name of the account holder. Paying the ransom in cash is even more dangerous, because then you have to arrange a meeting.”
“Dealing in bitcoins is an ideal way for criminals to do business,” says Rodrigues. “That is because bitcoins don’t work with banks, but with blockchain. That is nothing more than a database, a place to store information.”
This is how it works. “A block in the blockchain is a piece of information. For example: ‘Paulo gives three bitcoins to Yuri.’ A mathematic algorithm then produces a unique code that only belongs to this block: the hash. Blockchain’s power lies in the fact that everyone in the network receives a copy of this block and the hash that belongs to it. If someone then adapts the block and makes it ‘four bitcoins’, a new hash is created. Everyone can see that and knows that it is not correct. So, if the university sends ten bitcoins to the hackers and they say it was only nine, then everyone will know that this is nonsense. After all, they have a copy of the blockchain.”
Everyone can create a ‘wallet’, an account in the blockchain network. Every wallet has a public key, comparable to a bank account number, and a private key, your ‘pin code’. Rodrigues: “The big difference with ‘normal’ money is that no banks are involved. You deal directly with the other party.”
“If you don’t tell anyone your public code,” says Rodrigues, “then nobody will ever know it’s you. This is what makes it interesting for criminals. If the hackers subsequently transfer the bitcoins (a bitcoin is now worth over 7,600 euro at the moment) a few times between anonymous wallets, it becomes impossible to trace them.”
Like any money laundering activity, a though thing for the hackers is to actually do something with their bitcoins. “There are still very few places that accept bitcoins, so they will have to convert their bitcoins into real money.” That is very difficult to do through official channels, but there are ways, says Rodrigues. He shows a website where private individuals can organise meetings relatively easily in order to exchange bitcoins for cash. “Those hackers will most likely never be found.”