Bitcoin Shop Coinbase Boosts Hacker Bounties to $50,000

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The surging value of bitcoin has been a boon for the San Francisco exchange Coinbase, leading to higher revenue from commissions and a flood of new customers. One downside, though, is that the stakes are higher than ever when it comes to hacking.

Now that bitcoin prices are topping $ 6,000, any cyber crook who can break through Coinbase’s digital defenses could make out like a modern day Jesse James by plundering customer accounts. That’s one reason Coinbase has decided to increase the prizes it pays under a bug bounty program–a system that rewards hackers for privately disclosing computer vulnerabilities, which in turn allows companies to patch their systems before bad guys can exploit them.

Bug bounties used to be controversial, largely because companies feared they would invite cyber-attacks. But after tech firms like Google and Facebook proved the efficacy of bug bounties, a growing number of other organizations followed suit, including more traditional firms like GM and, beginning last year, the Department of Defense.

In the case of Coinbase, the digital currency exchange last week boosted its top bounty to $ 50,000 for critical vulnerabilities, and also increased rewards for more minor vulnerabilities.

According to Coinbase’s head of security, Philip Martin, the company’s bug bounty has paid out $ 176,031 in rewards to a total of 223 researchers in the last few years.

Speaking at a San Francisco conference hosted by the bug bounty firm HackerOne, Martin also explained that bounty programs only work if a company has the rest of its security operations in order.

“Bug bounties are only productive if you have a strong internal reporting process to start with. Do it badly, and [vulnerability reports will be ignored] and you’ll make hackers angry,” he said.

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Martin also explained that even a well run bug bounty program generates more noise than signal, saying only about 11% of all reports Coinbase receives amount to an actual security vulnerability.

He added that Coinbase, like other companies, continue to receive emails from suspicious people who claim to have found a vulnerability, and will only reveal it in exchange for a few bitcoin.

“We treat it like the attempted extortion it is–and ignore it,” Martin said.

Martin also disclosed that Coinbase has yet to pay out its top prize under the bug bounty program, in part because, as he said “our security doesn’t suck.”

Securing the code on its website is just one part of the security challenge for sites like Coinbase, however. As my colleague Jen Wieczner has reported, Coinbase faces a staggering amount of fraud that arises from crooks duping customers into revealing their passwords and then robbing their accounts.

Nonetheless, for firms like Coinbase, bug bounty programs appear to be an essential part of locking down the technical part of their security operations.

Tech

Here’s Another Reason Why Bitcoin Could Soon Hit $6,000

It took less than a month for bitcoin investors to shake off China’s cryptocurrency crack down and Wall Street naysayers. On Friday, the price of bitcoin jumped within striking distance of $ 6,000 as optimism surrounding the cryptocurrency reignited thanks in part to traders using the Japanese yen.

That comes after the price of bitcoin shot as low as about $ 3,000 in mid-September, after Chinese authorities shuttered local cryptocurrency exchanges, while J.P. Morgan CEO Jamie Dimon dubbed bitcoin a “fraud.

But it was neither the U.S. nor China, which have dominated the cryptocurrency markets since its inception, that apparently led to the price of bitcoin to come back up. Until recently, China has represented the majority of bitcoin trading since about late 2013. In 2016 alone, the Chinese yuan represented 96% of all trading with bitcoin, according to data from CryptoCompare, helping the price more than double that year. In fact, trading in China has been so heavy that since 2010, the vast majority of trades has still largely been dominated by the yuan.

But since Chinese investors began leaving major bitcoin exchanges for over-the-counter markets, its been the Japanese yen that’s begun taking over the role that the yuan once held. Over the past month, bitcoin trading using the Chinese yuan slid to 5% of total trades, according to data from CryptoCompare. Traders using the Japanese yen meanwhile have become 51% of the market, with $ 30.3 billion changing hands over the past month based on bitcoin’s current price. The U.S. dollar meanwhile represented a lesser 31% of trades.

The reason for Japan’s surge? The country’s government “has been extremely accommodating towards cryptocurrencies and bitcoin in particular,” said Fran Strajnar, CEO of Brave New Coin. Bitcoin’s liquidity is “quickly move from Chinese yuan to Japanese yen and Korean won, simply because of friendlier legislation, better clarity and better infrastructure and access coming out of Japan and Korea.”

In Japan, the government has been proactive in regards to addressing bitcoin. The country passed a law in April recognizing bitcoin as a legal payment method, with its Financial Services Agency issuing operating licenses to its bitcoin exchanges earlier this year. Trading in Japan has also been an attractive choice as the country’s exchanges operate on a zero-fee trading system.

It’s an interesting shift in the dynamics of bitcoin. In the short history of the cryptocurrency, the price of bitcoin has been dominated by investors using either the yuan, or the U.S. dollar. In 2011 for instance, the U.S. was the main player. A flurry of Chinese investors flocked in thereafter. In the latter half of 2015 especially, bitcoin trading activity from China began to pick up as the yuan devalued, pushing investors toward bitcoin as a way to move assets outside the country.

Notably, while Korean investors are beginning to make up a larger part of the overall market, they are still a relatively small section at about 7% of total trades in the last month.

Now, says Strajnar, it’s “all eyes on Japan and Korea as they continue to pave the regulatory way and in turn dominate crypto liquidity.”

But in the near term at least, aside from legal developments related to cryptocurrency in the U.S., China, Japan, and South Korea, investors also have technological developments to look out for. And there are two major ones around the corner: one planned hard fork on Oct.25, and another expected Nov.18. A hard fork happens when a segment of cryptocurrency users decide they don’t update the blockchain’s underlying software, which effectively creates one new currency. As a result of the fork, bitcoin owners would receive an equal amount of the new coin.

So why are these hard forks potential reason to be buying into bitcoin? Well, says Charles Hayter, co-founder of CryptoCompare, look to the recent August fork of bitcoin and Bitcoin Cash. Bitcoin users disagreed on how to speed up and cheapen cryptocurrency transactions at the time, leading to the split. While some users worried that Bitcoin Cash’s existence would divert users to the new coin and undercut bitcoin’s legitimacy, it proved to be an unneeded worry. The price of bitcoin continued to surge upward. And to top it all off, bitcoin owners also received a equal amount of Bitcoin Cash following the fork. That made some users quite a bit wealthier.

“In bitcoin, one plus one seemed to equal three,” Hayter said.

That’s not to say bitcoin users are guaranteed a good outcome after the hard forks. The concerns around the split fragmenting support for bitcoin still exist today—but having a major global economy signal acceptance of the cryptocurrency certainly helps keep the outlook rosier.

This is part of Fortune’s new initiative, The Ledger, a trusted news source at the intersection of tech and finance. For more on The Ledger, click here.

Tech

Bitcoin trades above $5,000 for first time ever

LONDON (Reuters) – Bitcoin smashed through the $ 5,000 barrier for the first time ever on Thursday, jumping as much as 7 percent to chalk up its biggest daily rise in over two weeks.

Bitcoin, the original and still the biggest cryptocurrency, has been on a tear recently, rallying nearly 75 percent in barely a month.

It has chalked up a more than fivefold increase in price since the start of the year.

Reporting by Jamie McGeever; Editing by Sujata Rao

Tech

ECB's Constancio compares Bitcoin to Dutch tulip mania

FRANKFURT (Reuters) – Bitcoin is not a currency but a mere instrument of speculation, the vice president of the European Central Bank said on Friday, comparing the digital currency to tulip bulbs during the 17th century trading bubble in the Netherlands.

The dollar value of the Bitcoin has nearly trebled this year and, while its adoption has yet to pick up in a significant way, the rise of this cryptocurrency is worrying central bankers across the world.

But ECB Vice President Vitor Constancio denied it posed a threat to monetary policy and compared its rise to the ‘Tulip mania’ seen three-hundred years ago.

“Bitcoin is a sort of tulip,” Constancio said at an ECB conference. “It’s an instrument of speculation … but certainly not a currency and we don’t see it as a threat to central bank policy.”

The ECB said year last year digital currencies, which are generally issued by private companies and only exist in electronic form, could in principle erode its power over the supply of money, inviting European Union lawmakers to tighten proposed rules on the matter.

Earlier this month, President Mario Draghi quashed an Estonian proposal to launch a government-backed cyrptocurrency, saying the only valid money in the euro zone was the euro.

Last week, Chinese authorities ordered Beijing-based cryptocurrency exchanges to stop trading and immediately notify users of their closure, signaling a widening crackdown by authorities on the industry to contain financial risks.

Reporting By Francesco Canepa; Editing by Toby Chopra

Our Standards:The Thomson Reuters Trust Principles.

Tech

Microsoft reverses course, says ‘no thanks’ to Bitcoin payments

Bitcoin’s day in the sun at Microsoft appears to be over, at least for now. According to a report on Softpedia published Friday, the purveyor of all things Windows has decided to stop taking the cryptocurrency after accepting it as a form of payment on the WIndows Store since late 2014.

Sure enough, Microsoft published a short help doc to its website that confirms the chance in policy. 

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