Security spend: Is the NSA out for Bitcoin?

Crypto-currency Bitcoin doesn't have it easy. While in theory the virtual money system should be secure, efficient, and offer a way to revolutionize the financial industry, things haven't always gone as planned. Mt. Gox is a good example — millions of dollars of the supposedly secure currency simply vanished, leaving users with no recourse. What's more, the price of bitcoins has been historically hard to predict, and even the currency making its way to wider markets hasn't smoothed things over. In the United States, for example, a New Jersey police officer was recently charged with selling stolen bitcoin mining equipment. All of these are petty issues, however, compared to the new theory that's making the rounds: Has Bitcoin been hacked by the NSA?

Fingers in many pies

According to an article by Pro Publica, the NSA has seen major victories in its fight to break encryption methods and access data from almost any corporation in the world. This includes banking records, intellectual property, medical information, and emails sent by the American public at large. This flies in the face of assurances by Internet service provider (ISPs) that consumer data is safe and unassailable by the spy agency. For those familiar with the work of Edward Snowden, the revelation shouldn't come as much of a surprise; after the agency was denied permission to insert “back doors” into encrypted systems across the country, they've simply taken the fight underground and undermined encryption technologies one by one.

The Pro Publica piece argues that these efforts actually fly in the face of the public security the NSA claims it wants to uphold, since the existence of encryption cracks and workarounds makes it possible for malicious actors to leverage these same tools and compromise American institutions. But it doesn’t stop there. Now, some bitcoin users believe that the NSA is actively trying to hack the cryptocurrency and gain insight about the transfer of funds — both by terrorists and legitimate citizens — worldwide.

Digging deep?

A recent NewsBTC article claims that the Bitcoin community is now under scrutiny, and that, with improved code-breaking technologies, it's only a matter of time before the NSA cracks this service — if it hasn't already. As noted by an intelligence-agency budget document, the national spy organization is still “investing in groundbreaking cryptanalytic capabilities to defeat adversarial cryptography and exploit Internet traffic.” In effect, with both money and a government mandate at their disposal, why wouldn't the NSA start digging into bitcoin servers?

Already there

According to a group known as the “CIA Project”, the NSA or CIA may be responsible for the creation of bitcoin itself. The Project claims that bitcoin creator Satoshi Nakamoto regularly removed posts relating to the CIA on the Bitcoin Forum and never left a single personal clue about himself online. What's more, his name roughly translates to “central intelligence” in Japanese. This is thin evidence at best, but a recent Cryptocoins News article notes that in 1996 NSA security researchers published a paper: How to Make a Mint: the Cryptography or Anonymous Electronic Cash in both an MIT mailing list and The American Law Review. The paper described a system much like bitcoin, leading some to suggest that the entire project was an NSA ruse all along.

Money in hand

So, is bitcoin an NSA stooge or under assault from the spy agency? For bitcoin users, it doesn't really matter; either way, their data may be at risk. You've got a few options to stay safe. One is opting for a super-secure wallet such as Case, which requires two signatures to authenticate any bitcoin transaction. Case is an entirely self-contained storage device, generating its own private key on activation. It only works when this key is paired with another Case-side key and your biometric data. The other option is to avoid bitcoin all together — at least until it's clear just how much control the NSA and other agencies have over its operation.

Digital currencies have ease of use on their side, but security is often spotty. Bitcoin may be little more than an NSA hacking project or spy agency shill.

 

Featured image: George Hodan / Public Domain Pictures.net and bitcoin (images have been modified)