Posted: December 31, 2013 by

Last updated:

Wow. Very cryptocurrencies. Such popular meme. So insecure? Wow.

Well, it’s happened. The internet is just a few steps away from becoming a sentient being, given life and value by those of us who worship it as our source of commerce, communication and entertainment.

We have created a new form of comedy, a new type of currency, a new way to live and of course a new form of crime. I am of course talking about the recent explosion of Dogecoin (a doge meme-based parody currency that is actually worth something now) and how cyber criminals have already hurt it.

A marketing specialist and a programmer created Dogecoin or DOGE and it is a variation of Bitcoin, in that it used the Bitcoin source-code as a base and worked up from there.

It was created for fun and as a way to show appreciation among the internet subculture (namely Reddit). Its value isn’t near that of Bitcoin however you never know when that may change. In addition, there is a higher number of Dogecoins to be distributed than Bitcoin as well (15,307,925,641 have been mined so far, and that’s only 15 percent)

Dogecoin Attack

Last week, the first major attack took place against Dogecoin users. Similar to attacks against Bitcoin, attackers broke into a digital Dogecoin wallet and stole millions of Dogecoins from wallet users. The estimated USD loss from the heist was approximately $12k – $18k, according to Anshel Sag of BrightSideOfNews.com.

The attack was similar to those against Bitcoin digital wallets. Unfortunately, it appears that while the technology for Digital Currency is advanced enough to make an impact, the technology behind its security, or rather those who host wallets online, doesn’t ensure the same amount of safety as one would expect from a traditional bank.

Other Cryptocurrencies Rising

Dogecoin actually sits a few slots below other cryptocurrencies as far as worth and popularity, Litecoin is a great example of a Bitcoin variant that has successfully taken off because it addresses limitations that Bitcoin has. There are numerous other Cryptocurrencies currently in circulation, including:

PeerCoin

NameCoin

Ripple.

Since the creation of Bitcoin in 2009, the market for Cryptocurrencies has taken off and is expected to continue growing as the technology gets more employed by businesses and traders.

Opinions about cryptocurrencies being taken seriously

A common argument against currencies like Bitcoin or Litecoin is that they are decentralized and therefore unsecured. There is no master bank of Bitcoin that can ensure your losses in the event of the attack.

Users who take on losses from digital wallet hacks are reimbursed (as much as they can be) by the host of the wallet service from their own personal accounts. Certainly that can’t keep up though.

Safe methods of using them

The biggest problem so far with cryptocurrencies is the ability for people to properly store their earned credits. It seems like using a Digit Wallet is the worst thing you can do because coins can easily be stolen if an attacker is able to break into the hosting server.

The best option for storing coins is to use an offline wallet, you can find a tutorial for Bitcoin wallets here.

Storing your coins offline in what is known as “cold storage” allows you to keep them close and secured without worrying about weak security from an online wallet losing you thousands in coins.

Unfortunately, the hype around cryptocurrencies has folks rushing to get their share but not taking the time to properly secure their wealth. This may have been a problem in the early days of most currencies, before wallets were invented. A good rule is to think of Bitcoins as dollars and to think of the internet is a street. Using an unsecured wallet online might be the equivalent of putting your dollar under a rock on the side of the road, not obvious but still pretty easy to steal.

Using cold storage would put your dollars in a safe in your home, where only you could get to it.

Conclusion

Bitcoin, Litecoin and Dogecoin are all revolutionary methods of online currency and while still in their infancy, shouldn’t be discounted because all the bugs haven’t been worked out yet. Give it time and we should expect to see either these or a similar form used daily to buy goods and services online.

Thanks for reading, safe surfing and DFTBA!