A Denmark based Bitcoin payment processor BIPS faced a security breach last week resulting in loss of 1295 bitcoins worth around US $ 1 million. The loss has occurred both to the service provider’s own stock as well as a few wallet holders.
According to security specialists that virtual currencies are targeted by malicious codes such as “Win32/Delf.QCZ,CoinMiner and MSIL/PSW.LiteCoin.A”. It has been pointed out that the service providers need to ensure adequate security on their own besides the security precautions that the users need to take.
The absence of central regulation in the Bitcoin protocol makes it impossible for the victims of the fraud to recover their lost Bitcoins. While lack of central regulation is said to be one of the strengths of the system, it is also a weakness that hurts the investors. The situation is similar to the early days of Internet where there was less of regulation and more freedom. However as the criminals started increasing their activities, the system had to come under more and more regulations and we are still struggling to find a balance between freedom and regulation.
Bitcoin system needs to understand this universal truth that “No Regulation leads to a Jungle Raj”. It is therefore better to have some controls before the system loses its credibility.
Naavi
