The spike in Bitcoin price is making it a less useful payment method in the cybercrime underground

The recent spike in the Bitcoin price and the fees associated with each transaction are making Bitcoin a less useful payment method in the cybercrime underground.

We have a long debated the use of unregulated virtual currencies like Bitcoin in the criminal underground. Virtual currencies have a crucial role in facilitating illicit commerce, it is normal that their fluctuation could have a significant impact on the criminal ecosystem. The recent spike in the price of Bitcoin and the fees associated with each transaction are making Bitcoin a less useful payment method in the cybercrime underground.

Originally, one of the points of strength for Bitcoin was that payments would be fast, cheap, and convenient. This was true until the beginning of this year when Bitcoin fees were often less than $0.10.

The spike in the Bitcoin value and related fees per transaction has made Bitcoin far less attractive for conducting small-dollar transactions that represent the vast majority of payments in the criminal underground.

“As a result, several major underground markets that traffic in stolen digital goods are now urging customers to deposit funds in alternative virtual currencies, such as Litecoin. Those who continue to pay for these commodities in Bitcoin not only face far higher fees, but also are held to higher minimum deposit amounts.”wrote the popular investigator and security blogger Brian Krebs.

Krebs cited as an example the case of the black marketplace “Carder’s Paradise” that he recently analyzed, well its administrators admitted difficulties due to the spike in the value of Bitcoin.

Krebs explained that the current minimum deposit amount on Carder’s Paradise is 0.0066 BTCs (roughly USD $100). The deposit fee for each transaction is $15.14, this means that every time a user of the black market deposits the minimum amount into this shop is losing approximately 15 percent his deposit in transaction fees.

“The problem is that we send all your deposited funds to our suppliers which attracts an additional Bitcoin transaction fee (the same fee you pay when you make a deposit),” Carder’s Paradise explains. “Sometimes we have to pay as much as 5$ from every 1$ you deposited.”

“We have to take additionally a ‘Deposit fee’ from all users who deposit in Bitcoins. This is the amount we spent on transferring your funds to our suppliers. To compensate your costs, we are going to reduce our prices, including credit cards for all users and offer you the better bitcoin exchange rate.”

“The amount of the Deposit Fee depends on the load on the Bitcoin network. However, it stays the same regardless of the amount deposited. Deposits of 10$ and 1000$ attract the same deposit fee.”

“If the Bitcoin price continues increasing, this business is not going to be profitable for us anymore because all our revenue is going to be spent on the Bitcoin fees. We are no longer in possession of additional funds to improve the store.”

“We urge you to start using Litecoin as much as possible. Litecoin is a very fast and cheap way of depositing funds into the store. We are not going to charge any additional fees if you deposit Litecoins.”

In the case of the Carder’s Paradise, the huge volume of transactions allowed the administrators to lower the price of stolen credit cards to compensate the increase of the transaction fees, but it is an exceptional scenario.

To read the original article:

http://securityaffairs.co/wordpress/67136/cyber-crime/bitcoin-price-underground-effect.html?utm_content=bufferfd94d&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

 

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