Windows 7: New Trojan Targets Bitcoin Wallets

Privacy advocates and seedy characters on the edge of Internet legality alike use Bitcoins as their virtual currency of choice. The anonymous, decentralized P2P nature of Bitcoins lets you transfer money without ever having to contact a bank or even know the true identity of the person on the other end of the transaction. Recent events have dragged the shadowy currency into the light of public scrutiny, and now its squirming users have another headache to deal with: a trojan designed specifically to pilfer your Bitcoin wallet.

The malware goes by the name Infostealer.Coinbit. Once it works its way onto a Windows PC, the program checks the default location for Bitcoin's wallet.dat file. Your wallet contains the encryption keys that are essential to Bitcoin transactions. If the trojan finds a wallet, it sends the data file to the attackers.............

Bitcoin, the decentralized virtual currency whose value has skyrocketed in recent weeks, faced a key test Monday as a veteran user reported that Bitcoins worth hundreds of thousands of dollars had been stolen from his computer.

Ars Technica was unable to independently verify the user's story, and he did not respond to our request for an interview. But whether the story is true or not, it highlights a major disadvantage of the currency's much-touted lack of intermediaries. Bypassing middlemen frees users from government meddling and bank fees. But it also deprives them of the benefits those intermediaries provide, including protection against theft and fraud.

As we reported last week, Bitcoin's key selling point is its clever peer-to-peer scheme for recording transactions. Rather than relying on a centralized database, the Bitcoin protocol allows any computer on the Internet to participate in the payment clearing process. At the end of each 10-minute round, one of the nodes is chosen at random to receive a payment for his contribution to the process. For this reason, participating in the clearing process is known as "mining" Bitcoins

Bitcoin - the digital currency that has lately become a point of contention between those that consider it a perfect way of handling payments online and those who said that its anonymous nature will be severely misused by criminals - has definitely caught the attention of said criminals.

Bitcoin. You have undoubtedly seen this word as of late, but what is it? Where did it come from and why is it all the rage in the news right now? How does it work, why is it so complex to understand for the average person, and how is it that 1 BTC (shorthand for “bitcoin”) is currently worth considerably more than the USD and Euro? Why should anyone care about Bitcoin? Well, if the U.S. Government cares enough such that the Principal of Bitcoin, Gavin Andresen, was asked to give a presentation to the CIA about Bitcoin this week, then there is plenty of reason for care and concern.

It’s been a rough weekend for Bitcoin. First, new Bitcoin malware hit the Web last Friday which attempts to steal a Bitcoin user’s wallet and email it to an email address. Now, Mt.Gox — a popular Bitcoin exchange market — is undergoing damage control after the computer of an auditor of theirs had their system compromised.

The hacker who broke into the system obtained an old Mt.Gox database consisting of user names, email addresses, and password hashes. Additionally, they used the credentials of one account which contained a large number of bitcoins to log in, sell $1000 worth of bitcoins, then buy them back and withdraw them. This series of events caused the market to flash-crash, thus taking the value of bitcoins down to one cent per bitcoin for a moment before jumping back up to ~$13 per bitcoin.

Watch it happen here:...........