If this isn’t peak bitcoin, I’m not sure what is. This week saw a staggering price run ($17,000!!!) along with wall-to-wall media coverage, and was capped off by the CEO of Coinbase—whose core business is bitcoin—telling people to calm down and invest responsibly.
In the midst of the mania came a report that a bitcoin business had been hacked, and that crooks had emptied its digital wallets to the tune of over $60 million. The incident served to give more grist to a common criticism by bitcoin hackers—that the digital currency is somehow insecure and vulnerable to hacking.
But is it really? In a story titled “5 Ways Bitcoin is Stolen“, I took a closer look at various incidents of theft over the years and came to a simple conclusion: Bitcoin’s technology can be trusted so long as you know how it works, or if you rely on the right people. All of the thefts in recent years have been the result of carelessness on the part of bitcoin owners, or else incompetency or dishonesty from the companies they used.
All in all, bitcoin is more secure than most existing financial services, including legacy banking platforms like SWIFT, which has been compromised repeatedly by hackers.
But all of this speaks only to the technical security of bitcoin. Its financial security is another matter. As the boom—or if you prefer “bubble”—keeps growing, the prospect of a bitcoin collapse could do damage to many individuals, not least of those who are signing up for bitcoin-related IRA products (yes, it’s a thing—and yes, it’s probably a terrible idea). Even more worrying are the warnings about how the impending bitcoin futures market may not stabilize prices as promised, but could end up contaminating the larger financial system. More on that below. Have a nice weekend.
Jeff John Roberts
@jeffjohnroberts
jeff.roberts@fortune.com
Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.
THREATS
Any time now, NSA: The Kremlin-tied hacker group known as Shadow Brokers has been dumping sensitive files since early this year, yet there appears to have been no related arrests. Security expert Nicholas Weaver says this is strange and confusing, especially as the stolen documents contain metadata that would point to who at the agency may have leaked them.
More alarm over Apple: The iPhone maker’s reputation for top-notch security took a hit recently upon the discovery of a gaping flaw that let anyone take over a computer by entering the word “root.” Now comes word that Apple’s HomeKit had a bug (since fixed) that exposed smart home devices to hackers.
Stop following me: Creepy tracking cookies are just a price you have to may for using free websites like Google or Facebook. Or are they? Ghostery just improved its browser plug-in with a new tool that uses artificial intelligence to recognize web trackers—and then overwrites them before they can relay that information back to a website.
Nice cash, NiceHash: The hackers who robbed the cyrpto-currency service NiceHash are criminals with an impeccable sense of timing the market—their looting of 4,700 bitcoins coincided with a week when bitcoin shot past the $17,000 mark. NiceHash says it is hoping to recover some of the stolen funds but, well, it’s bitcoin, so good luck with that.
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ACCESS GRANTED
A bitcoin-related liquidity crisis at smaller clearinghouses is not probable, Peterffy says. But if there is such a crisis, he warns it would quickly contaminate the rest of the financial system.“My fear is in the unlikely event something like that happens, we’ll have something like Lehman Brothers — or worse,” he said.
—Fortune spoke to Thomas Petterfy, a brokerage billionaire who is known as the “father of high speed trading,” about why he fears bitcoin futures contracts set to launch next week could trigger a 2008-style financial crisis.
FORTUNE RECON
The SEC’s New Cyber Unit Just Filed Its First ICO Charges by Jeff John Roberts
Robot Developer Warns AI Could Lead to Catastrophe by Aaron Pressman
Tim Cook Responds to Criticism Over China’s Internet Censorship by Polina Marinova
Facebook Messenger Went Down Globally and People Freaked by Billy Perrigo
Hackers Hold North Carolina Computers for Ransom and Demand Two Bitcoin by Jeff John Roberts
ONE MORE THING
Worried about the winter blues? There is mounting evidence that psilocybe—aka magic mushrooms—can reboot the brains of those suffering from depression or mental illness. Now, a company backed by Peter Thiel says it’s going forward with clinical trials in 2018. The test will come nearly 65 years after Aldous Huxley described his remarkable experiments with mescaline in Doors of Perception (a nod to poet William Blake). Have a nice trip, er, weekend.
