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Bitnapping: A New Marketing Program for Bitcoins. It’s Ransomware.

Written by Gary North on December 20, 2013

The secret to success in marketing is rapid penetration of a new market.

A group of Bitcoins users has found a way to do this. They hijack people’s computers, encrypt the files, and then demand payment in Bitcoins. If the victims refuse to pay, their files are locked permanently. No access.

This way, people who have never heard of Bitcoins are brought into the Bitcoins community. They have 72 hours to send the money, or else the price rises by 20 to one. Now, that’s a true incentive! Marketers call this strategy “reasons why.” It is also called “act now.”

I call it Bitnapping.

Here is how it works. A criminal sends out what appear to be legitimate emails with an innocent-looking attachment. The victim opens it. A trojan then takes over any business-related files on his computer. It locks up these files by encryption.

There is no escape. The encryption program’s formula is unbreakable. If you are hit, you either comply, or else you do not get your files back if you failed to back them up.

This is like money in the bank for companies that provide file back-up services, which I recommend. It is also a way to introduce millions of people to Bitcoins.

By providing a means of payment for the ransom payments, Bitcoins will now enter markets where non-programmers operate. Computer programmers are the main beneficiaries. The criminals win. They are programmers.

Because of increased demand for Bitcoins from the business community, people who have invested in Bitcoins also benefit. As the market for Bitcoins shrinks, because of central bank prohibitions on the use of Bitcoins by commercial banks and other businesses, demand for Bitcoins will rise in those nations whose central banks still allow Bitcoins transactions.

A Boston CBS TV news station reports on how well this scheme is working. “As the ransomware takes over your computer, a countdown clock appears and shows victims how long they have to pay up. That means purchasing a key, or software, to reverse the process.” A local FBI agent says that this appears to be the perfect crime. The FBI informed WBZ-TV they are very worried about this spreading in 2014.

So far, no one has been caught.

Here is how the Bitcoins marketing plan works.

CRYPTOLOCKER

CryptoLocker is the name of a Trojan horse malware which surfaced in in October. It is a form of ransomware that targets computers running Microsoft Windows.

A CryptoLocker attack may come from various sources. One such is disguised as a legitimate email attachment. When activated, the malware encrypts certain types of files, mainly business-related files. The criminals are going for the money: businesses.

Although CryptoLocker itself is readily removed, files remain encrypted in a way which researchers have considered impossible to break.

The malware then displays a message which offers to decrypt the data if a payment is made: half a Bitcoin. There is a deadline. If the deadline is not met, the malware offers to decrypt data via an online service provided by the malware’s operators for ten Bitcoins. In short, “Act now!”

Due to the length of the key employed by CryptoLocker, experts considered it practically impossible to use a brute-force attack to obtain the key needed to decrypt files without paying.

So, there you are. This is a Bitcoins marketing strategy that is almost flawless. New markets will open up around the world.

Privacy pays in certain markets. Bitcoins is a costly way to gain privacy, compared to an ATM machine, but if businessmen are highly motivated, they will pay. Few businesses use Bitcoins to sell anything, but they will soon be willing to pay to receive programmers’ services.

As Bitnapping increases, complaints against Bitcoins will increase. Critics will claim that this form of unregulated money-laundering must be stopped. Central banks are in a position to prohibit Bitcoins-related transactions by commercial banks, just as the People’s Bank of China did recently.

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14 thoughts on “Bitnapping: A New Marketing Program for Bitcoins. It’s Ransomware.

  1. Businesses don’t like competition. Alternate forms of money are competition to the central banks. The central bank, like any other business, will lobby the government to create regulations that squash their competition. They now have a compelling argument that will work. For good or bad, this will end Bitcoin.

    My big worry about this type of extortion, is that government agencies (i.e. the IRS) will see this as another method of compulsory payment. Time to buy an external hard drive for backup that remains disconnected from normal use of your pc.

  2. How exactly is this different from someone who does the same thing using FRNs? North continues to grasp at straws re: Bitcoins.

  3. I don't understand all this. I ain't got no bitcoins. So what if i don't pay, what happens next?

  4. Svialtoslav Borodin says:

    Yet another illogical schoolboy howler from Gary North.

    Gary starts out by saying that criminals using Bitcoin are somehow responsible for "marketing" Bitcoin this is base sarcasm; the lowest form of wit. It is not analysis, it is not insightful. It is not humorous.

    Next Gary mischaracterises a group of criminals as "Bitcoin users". I wonder if these people had demanded the US Dollar that he worships whether or not he would call the extortionists, "dollar users" instead of just "criminals". What Gary is doing here is not rational. He is treating this story differently to any other story about crime simply because the criminals use a money that he doesn’t personally like. This is pure emotionalism.

    One thing is for certain; this story confirms yet again, that Bitcoin is very valuable and useful in sending money around the world. It is anonymous enough for criminals to trust it to receive the funds from serious crime. This story completely refutes all Gary's arguments against Bitcoin in these aspects.

    Gary has decided to call this "Bitnapping" a simple portmanteau of Bitcoin and Kidnapping. There are the marketing skills on display; very creative!

    Poor old Gary. Rather than spending his time trying to understand Bitcoin, he is Googling furiously for negative and sensational stories about Bitcoin, that do nothing but reinforce the idea that Bitcoin works and has value.

    If it wasn’t so sad, it would be hilarious. Actually, it IS hilarious!

  5. Igor Karbinovskiy says:

    Gary North is in marketing, as he has told us. The purpose of his war on bitcoin is not to inform us, or to contribute to a discussion of bitcoins, but to market his websites. Stir up controversy, generate pageviews. Why do I say that? Well, what has been the tone of his articles on bitcoin thus far? It hasn't been a neutral, seeking-after-truth tone that I would expect from someone who seeks to clear up confusion. It has not been the tone of a scientist, but rather a marketer. They have been designed specifically to raise our hackles and to generate controversy. And it has worked. Gary North is good at what he does.

  6. You're wrong about only one thing. Gary doesn't worship the US Dollar, he worships gold and other "precious" metals.

    The rest: bravo.

  7. desi erasmus says:

    No, I think North worships the God of the Bible, but that doesn't free him from the same temptations to hubris and pontificating beyond his domain of competence that face every pundit. On the one hand, BTC is going to zero, and on the other it is a powerful tool for extracting ransom from hapless internet users who are careless with maintaining their offline backup archives.

    It's true that North has a gift for marketing, and his series on BTC shows the limitations of that gift, when not accompanied by a serious effort to understand what he is analyzing.. Given the experimental nature of BTC, and its volatility in market exchanges, he is helpful in warning away rubes from "investing" in what is still a very risky venture. However he is remiss in not investigating the potential developments from the elegant "Satoshi" approach to the "mutliple spending" problem. As the recent TARGET fiasco and many others like it have shown, the existing "conventional" payment systems are not immune from serious problems, attendant on the necessity of "centralized controls" (which can be hacked).

  8. I do not see that Mr. North is saying anything against the use of bitcoins. He is only warning of insidious strategies that extort money by disrupting normal business operations. It seems most of the respondents here are into fixing blame rather than fixing a problem. I prefer MYOBS to Bitcoins, dollars or gold.

  9. "How exactly is this different from someone who does the same thing using FRNs?"

    FRN's don't need marketing nor user base expansion.

  10. "The rest: bravo."

    Yes, Svialtoslav's criticism is much better than your pathetic efforts at criticism Shame. I hope you took notes.

  11. And our honest government, that continually monitors and snoops on everything we law abiding people do, can't find these hackers?

  12. It may well be the Gov benefits from the hackers' activities by demonstrating the evil inherent in the free enterprise system as they view it. Book 'em, Danno.

  13. Or perhaps this scheme is perpetrated on behalf of those interest groups who want bit coin to die? Make bitcoin the international money of extortion and get the masses to cry out for their govenernments to unleash their extensive snooping abilities to squash bitcoin. Two birds with one stone: bit coin is dead and clandestine operations regain an good rep and expansion of power.

  14. Potawatomi13 says:

    It wouldn't be at all surprising if the govt refuses or delays cracking down on these BitCoin thieves in the expectation that their competition for increasingly worthless dollars will die out.
    As for North it quickly becomes obvious that he doesn't like BitCoin but seems to indeed worship the Feds criminally devalued US official money.