The impact of ransomware on cryptocurrency prices

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Almost from the moment Bitcoin was invented, critics have been pointing to the use of cryptocurrency in crime. Facts have proved that cryptocurrency is very useful for tax evasion, money laundering, and the black market on the dark web. However, cryptocurrency advocates believe that cryptocurrency has not been used for crime, just as the U.S. dollar is still the currency of choice for criminals worldwide.

It is hard to say that Bitcoin and other cryptocurrencies actually increase the number of crimes committed by criminals. Cryptocurrency is just a revolutionary technology, and sooner or later it will affect the way everyone works, including criminals.

Although this is unfortunate for crime victims, from an investor’s point of view, this looks more like a feature than a bug. The rise of the Silk Road and other dark markets drove the early demand for Bitcoin, which translated into a sharp increase in the price of Bitcoin.

The dark market continues to grow, but recently another wave of illegal activities has eclipsed the dark market in terms of generating demand for cryptocurrency ransomware.

The evolution of the ransomware threat landscape

Ransomware existed before the advent of cryptocurrency, but it didn’t really take off until the advent of Bitcoin. Ransomware works by encrypting the file system and then demanding a ransom (usually Bitcoin) in exchange for a decryption key.

At present, the severity and overall scale of ransomware attacks are growing rapidly. From 2019 to 2020, ransomware attacks have increased by more than 400%. In 2021, this explosive growth trend seems to continue.

There is a snowball effect here. As ransomware hackers extorted money from victims, most of their profits are reinvested in expanding the organization and developing new, more complex viruses.

A new method called “ransomware as a service” (RaaS) has emerged, in which a dedicated software development team can produce software that can circumvent the latest antivirus software. Then, they license their software to small hackers who try to break into corporate and government networks. Then, the RaaS provider draws a certain percentage of the spoils.

Ransomware hackers also ransomware by stealing sensitive data and threatening to release it. Confidential patient data from healthcare providers is a particularly precious target because the cost of dealing with medical data breaches can be higher.

To make matters worse, ransomware hackers now even offer bonuses to disgruntled employees, provided they are willing to help inject ransomware into company networks. This adds a new motivation for the boss to be friendly to his subordinates.

Impact on cryptocurrency prices

It is estimated that the ransom paid in 2020 will reach at least US$350 million, an increase of 311% over 2019. However, this is probably an underestimation, as many companies try to keep ransomware attacks quiet to avoid damage to their reputation.

this The biggest ransomware attack ever Brought a ransom of up to 40 million U.S. dollars. Most ransomware victims are not typical cryptocurrency customers, but it goes without saying that someone showing up on an exchange and buying $40 million worth of Bitcoin will cause some serious price fluctuations.

Is this really enough to affect the price of Bitcoin?A sort of report The Bank of America estimated in March 2021 that $93 million could increase the price of Bitcoin by 1%. Even if the official estimate that the ransom paid in 2020 is 350 million U.S. dollars is correct, it means that it may push the price of Bitcoin up by a few percentage points.

2021 is expected to be a larger year for Bitcoin ransom payments, so the surge of ransomware may help drive market trends.

For most companies, the biggest cost associated with ransomware is downtime, so many companies are buying Bitcoin in case of a ransomware attack. By slowly buying reserves over time, they end up paying less than if they entered the market and bought a large amount of money at once.

This means that many companies may buy Bitcoin because they are worried about ransomware, even if they have never actually paid the ransom. Coupled with the ransom that no one knows, ransomware-driven cryptocurrency purchases may account for a large portion of total demand.

In Bitcoin, this may move the market a few percentage points, but it may have a greater impact on smaller cap tokens. A ransomware group started to encourage victims to pay ransom in Monero because of its anonymity.

The market value of Monero is about one-twentieth that of Bitcoin, so a large ransom can indeed drive the market.

When will we see peak ransomware?

Almost all experts agree that the ransomware crisis will get worse before it improves. Due to the COVID pandemic, more and more work is done remotely, and there are more and more security vulnerabilities that hackers can exploit. Increasing reliance on IT systems also means that hackers have more bargaining chips to demand ransoms.

For the foreseeable future, ransomware seems to continue to drive demand for cryptocurrencies.