The market is worried that Bitcoin’s encryption technology has been cracked by the FBI, thus losing its security and censorship resistance.
Original title: “Why is the market panicking?” How does the US FBI obtain the hacker’s private key? Hit the two major weaknesses of Bitcoin
Author: Uncle Tan
On Monday, the U.S. Department of Justice issued an announcement stating that they had restored most of the Bitcoin that was ransomed by Colonial Pipeline, the largest U.S. oil pipeline company last month. With this news, perhaps because of concerns that Bitcoin’s encryption technology has been cracked by the FBI, and thus loses its “censorship resistance” characteristics, the price of Bitcoin dropped sharply, as low as US$31,716.
Ransomware is an important “application” of Bitcoin
Since its inception, Bitcoin has often been criticized by people, calling it “useless”. Although companies such as Steam, Microsoft, and Tesla once accepted Bitcoin as payment, they often stopped accepting it for a period of time. There are two main reasons. One is that very few users are willing to pay with Bitcoin; the other is that according to the current state of the world, it is more convenient to accept legal currency than Bitcoin in all legal fields. Therefore, most legitimate businesses are not willing to accept Bitcoin as payment.
In the illegal or black-gray field, Bitcoin can often become the payment preference. Therefore, Bitcoin has been widely used in areas such as money laundering, gambling, and dark web markets. Ransomware is one of the applications of Bitcoin in the illegal field. Even, many people have heard that the first time they heard that Bitcoin was through ransomware.
In 2017, the famous ransomware WannaCry swept the world. Some people on the Internet literally translated the name of the software as “wanna cry”. In fact, it is the abbreviation of “Wanna Crypto”, and the real meaning is “want cryptocurrency”. WannaCry has a wide impact, and some domestic universities and energy institutions have also been recruited. So in May 2017, the National Internet Emergency Center issued a special report .
According to U.S. media reports, in 2020, the U.S. encountered a total of 15,000 ransomware incidents, causing economic losses between 596 million and 2.3 billion U.S. dollars.
How does the FBI obtain the hacker’s private key?
Regarding how the FBI obtained the private key of the hacker’s Bitcoin address, despite many speculations, apparently no one knew the truth.
In an interview with NBC , Elvis Chan, a San Francisco FBI staff member, declined to disclose the details of obtaining the private key because the same method may be used in future operations. But at the same time, he also made it clear that this operation does not depend on “waiting for criminals to use US cryptocurrency services.”
This statement at least denies the FBI’s speculation that the FBI obtained hacker funds through exchanges. Most transactions have strict KYC/AML policies, not to mention US exchanges, so hackers are unlikely to directly use US exchanges to launder money.
Since this operation only recovered part of the extortion funds, it basically negated the FBI’s speculation that the Bitcoin encryption algorithm had been cracked, because if the FBI had cracked the encryption algorithm, it would obviously be able to recover all the funds.
Elvis Chan also mentioned that the operation benefited from “most of the Internet infrastructure is in the United States,” which facilitated the FBI.
Therefore, the closest guess to the facts is that the blackmailer used a full-node wallet located in North America, and the full-wallet would leak the node’s IP when broadcasting transactions. From a security point of view, each address can only be used once, and the query through the blockchain browser shows that the blackmailer twice used the address bc1qq2euq8pw950klpjcawuy4uj39ym43hs6cfsegq to send bitcoins, which caused the IP to leak, which made the FBI caught Opportunity to obtain the private key.
Li Tianzhao, CTO of Biyin, stated that hackers stored the ransomware in a bitcoin wallet using a US company’s cloud service, and the cloud server was directly taken over by the FBI in the United States, thus taking it back without the private key. ransom.
The impact of the FBI’s acquisition of private keys on the market
In the past month, ransomware’s attack range is larger and the impact is wider. The attack on Colonial Pipeline has severely affected the oil supply on the east coast of the United States and caused panic in a short period of time; for the world’s largest beef manufacturer JBS The attack affected the beef supply in the United States.
According to a Reuters report , on the 4th of this month, the US Department of Justice has elevated the threat of ransomware to the level of terrorism, and FBI Chairman Christopher Wray directly compared the threat of ransomware to 911. Since it is terrorism, when asked whether military actions will be taken against ransomware, US Department of Commerce Secretary-General Gina Raimondo replied that “all possible options can be considered in order to combat ransomware crime.”
This time, the FBI has acted quickly to recover the funds ransomed by the Colonial Pipeline. However, for cryptocurrency, it is equivalent to “restricting” the important use of cryptocurrency in the short term, thus causing the price to fall rapidly. But in the long run, reducing the application in the field of crime is vital to the healthy development of cryptocurrency.
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