Bitcoin community adapts to hackers and fraudsters

AccessTimeIconMay 21, 2013 at 3:23 p.m. UTC
Updated Sep 10, 2021 at 10:46 a.m. UTC

The Bitcoin community has adapted to verbal, criminal and cyber attacks on the currency, an academic paper due for release tomorrow, reveals.

The attacks - whether from hackers, fraudsters or government regulators - seem to be strengthening the community, the research Breaking Out of the Bank in Europe - Exploring Collective Emergent Institutional Entrepreneurship Through Bitcoin suggests.

The rise in discussion of attacks in the last two years, as well as the increasing number of start-ups like Bitpay, Coinbase and Coinsetter, have collectively increased awareness and improved technologies that prevent fraud. In other words, the community has acted to defend itself, the paper says.

The paper says:

"[I]t seems that these threats have mobilized the community to self organize and bring the community together around a common purpose...

When the community is challenged and still absorbs the shock, the community appears to be strengthened rather than damaged. Therefore, we propose that these instances of fraud, by bonding the community and by flourishing safe businesses around Bitcoin, actually increase Bitcoin’s institutional entrepreneurship potential."

Researchers studied online Bitcoin activity from Facebook, LinkedIn and other sites. They also examined 1.15m posts on Bitcointalk forums written by almost 22,000 people.

The research suggests there is evidence of the open-source Bitcoin community increasingly acting as an "institutional entrepreneur". It also says that Bitcoin is having an impact on the behaviour of traditional banks. The paper says: "[T]here are indications that the scheme is initiating and implementing substantial changes in the financial institutions that are deeply entrenched globally."

Researchers warned that the paper was very much a 'work-in-progress', but it still provides a rare look at how the community is changing. They said they hope to conduct more fine-grained analysis of forum posts as well as look at what motivates individuals who are using Bitcoins.

The paper noted changes in forum conversations away from practical, and technical, advice on mining or using wallets to increasing discussion of new services and businesses.

The research also found that five of the top-ten most active forum posters on Bitcointalk were active entrepreneurs, such as Phinnaeus Gage who runs Bitcoin 100. The other five were all anonymous. Researchers could only identify one of them from information available on the site or elsewhere. That individual works on hardware applications for improving mining performance, the other four could not be identified.

The Swedish researchers noted the community keeps careful track of any theft or scam of Bitcoins worth more than 1,000 coins. They found 25 separate such incidents of fraud and theft and looked in detail at Bitcoinica - a Singapore exchange which went offline in 2012 after apparent hacking attacks.

The paper was written by Robin Teigland and Zeynep Yetis, from the Stockholm School of Economics and Tomas Olov Larsson from Karios Future. It will be presented to the 15th Annual Swedish Network for European Studies in Economics and Business conference in Molle tomorrow.

Image credit: Flickr


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