Bitcoin hacking raises security concerns

Bitcoin hacking raises security concerns
A customer feeds cash currency in to a Bitcoin ATM located in Flat 128, a boutique in New York's West Village.

Concerns are rising over the security of the digital currency bitcoin following hacking cases that allegedly took place for the first time in South Korea at local online bitcoin exchange Bitcore.

A man surnamed Kim in the southeastern port city of Pohang filed a complaint with the Pohang Cyber Police Agency on Nov. 14, claiming that 15 of his bitcoins worth around 6.2 million won (based on the value of a bitcoin as of Monday) were stolen by an anonymous person operating from Bitcore on Nov. 11.

Another user of the bitcoin trading website posted comments on an online community forum saying his bitcoins were stolen the same night.

"When I tried to access the mobile site of Bitcore on my smartphone at around 10:30 to 11 p.m., I saw nothing but an error message in English," Kim told The Korea Herald.

The next day when Kim was able to log in to the website, he found out that his bitcoins had been transferred to another bitcoin trader's account without his consent.

Traders receive a verification code on their smartphone when they try to sell their bitcoins, but Kim said he had not received any security code for the illicit transaction.

After the incident, Bitcore officials tried to track down the IP address belonging to the account that received Kim's bitcoins, but the anonymous nature of the bitcoin system kept them from verifying the owners account details. No compensation has yet been made for the alleged theft cases, nor has an advisory notice for possible hacking attempts been put up on the website, upsetting the users of the online exchange.

The police confirmed that it received Kim's complaint, but said it had not launched an investigation into the hacking due to other ongoing investigations.

Kim who mostly makes deals via his smartphone, Samsung Electronics' Galaxy Grand One, said he had done nothing unusual with his smartphone nor noticed any suspicious activity on his handset before the digital currency was transferred.

"This case could be just a small individual incident, but there could be other hacking cases on a bigger scale down the road if no action is taken," Kim said.

He has now placed his remaining bitcoins in different digital wallets at other bitcoin trading agencies such as Kobit, Xcoin and Blockchain.

The volume of bitcoin trading here is not as big as in other global markets, but similar crimes could take place regardless, according to some experts.

It has been reported that some malicious codes targeting Korean bitcoin websites were being distributed online in recent months.

A series of hacking cases overseas indicate that storing bitcoins in digital wallets is not perfectly safe.

In 2013, hackers stole US$1.2 million (S$1.58 million) worth of bitcoins from the bitcoin company in the US, and the Japanese exchange Mt Gox went bankrupt after having lost a billion dollar worth of the virtual coins due to alleged hacking.

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