VC Greed Will Destroy Bitcoin From Within

The Bitcoin industry has seen a big interest from VC’s all over the world in recent years, resulting in a lot of exciting blockchain projects to be in development.  However, VC’s are not the most patient people, as they want to establish a timeline to achieve a return on investment as soon as possible. This clash between VC expectations and the time required for proper research and development of blockchain solutions is a major threat to Bitcoin.

Also read: Ethereum Price Weekly Analysis – Uptrend Remains Intact

VC Funding Is A Double-Edged Sword

A lot of Bitcoin companies and projects would be nowhere today without the backing of wealthy VC’s as it is quite expensive to run a business in the financial world. While there are quite a few Bitcoin entrepreneurs who had earned a lot of money in the past, it is always good to get some VC funding involved along the way.

After all, there is a lot more to venture capitalist support than just the financial side of things. These individuals have years of experience in the financial and technology industry, and they will guide startups and entrepreneurs to ensure their business plan is robust. Such a combination of money with expertise and knowledge make it invaluable to have the backing of a VC in the Bitcoin industry.

That being said, there is the topic of expectations associated with the investment made by a VC. Whenever somebody puts a lot of money into a company or business idea, there is the unspoken expectation of making a return on investment sooner rather than later. While most of these wealthy individuals will acknowledge research and development will not happen overnight, they will not wait years to see some form of a return either.

Investments in any industry are all about achieving a return as soon as possible. Bitcoin and the blockchain are both hot industries right now, and the amount of funds flowing into the digital currency ecosystem is all part of the VC crowd wanting to be part of the next big thing. But at the same time, they remain on the lookout for additional opportunities, which is why they want to recover some funds from their Bitcoin investment sooner rather than later.

Clashing interest between wanting to be part of the next big thing and trying to achieve a fast ROI do not mix well in the Bitcoin industry. These expectations put a lot of stress on startups and entrepreneurs, forcing them to rush the job or make wrong decisions which will ultimately lead to failure of the concept.

Moreover, a VC has quite a say in the direction of Bitcoin projects and how things should be handled. Not all startups or entrepreneurs want to risk standing up to investors, as they are afraid to lose financial backing. Certain individuals in the VC landscape are even looking to detach Bitcoin from the blockchain, as they are interested in the technology rather than the entire ecosystem.

Too Many Blockchains Is Counterproductive

Over the past few months, various alternative blockchain solutions have started getting a lot of attention. On the one hand, there is Bitcoin 2.0 project Ethereum, which has recently been added to Microsoft Azure’s platform. Furthermore, the R3 CEV consortium is looking to merge private blockchains with banking infrastructure. In fact, they employed the services of five different blockchain service providers, none of which are related to Bitcoin itself in any way.

A wedge is being driven between those who want to focus on Bitcoin and its blockchain and those who just want to make quick profits. Unfortunately, the average VC will be found in the latter category, which is not making the job any easier for startups and entrepreneurs. Being passionate about Bitcoin is no longer sufficient to attract investors, as most of them want to steer away from Bitcoin as far as possible and solely focus on the blockchain.

Source: Zerohedge

Header image courtesy of Shutterstock


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The financial system we know and use today is not broken, according to financial experts and governments. At the same time, central banks are wielding so much power, and governments are next to powerless when a decision needs to be made. To make matters even worse, the Australian Central Bank is considering to print even more money to help boost the local economy. But printing this helicopter money is not helping anyone in the long, and Australians should start reconsidering their options.

Also read: Cabinet of Japan Greenlights Bitcoin As Payment Method

Helicopter Money Will Not Save Central Banks

There is no such thing in the world as having the opportunity to create value out of thin air. Or to be more precise, that is not possible unless one is a central bank in any country in the world, as they can seemingly keep printing additional money without any repercussions. However, that scenario might be coming to a halt soon in Australia, as helicopter money will not save the central bank from what is coming their way.

What makes the appeal of helicopter money so impressive is how the distribution of funds doesn’t matter at all. Just the fact this new funding is there with a supposed value – although there is no currency backing to speak of – is a disgrace in its own right. However, there is a benefit to this practice as well, as the government would not need to borrow the money or levy higher taxes on the population.

While that may sound like a great way to solve things on paper, we do not live in a fantasy world where these types of solutions are designed to solve problems. In fact, central banks have become rather complacent and think that helicopter money is the answer to any financial crisis, even the global recession if need be. It has to be said, though, this is the easiest solution to tackling the global recovery problems, but that does not make it a viable option.

australia, dollar, aud, bitcoin

While it’s certainly true central banks have been able to buy viable time in a time of economic turmoil; they have not done anything else but that. Additionally, this borrowed time has not been used in a positive manner, thanks to continual low-interest rates and unconventional policies. In the end, this allowed governments to finance deficits, and authorities were given a free pass to delay the reforms countries like Australia need very badly.

This rotates us back to the concept of helicopter money as, despite all of its flaws and risk for governments to become entirely reliant on the whims of central banks, it remains the easiest solution. However, helicopter money was designed for central banks to print funds and distribute it to the public, rather than putting it in the hands of governments who can then further delay reforms.

Can Bitcoin Offer Solution?

Over in Australia, there are only two choices on the table right now: helicopter money, or quantitative easing. The latter would bail out the government with a loan, but repayment of that loan would lead to higher taxes for consumers over the coming years. Helicopter money would remove this taxation, and make it a permanent loan between the central bank and government.

That being said, a loan from a central bank – permanent or not – is still a debt with an interest cost. Even though the consumer would not be responsible for paying back the money, the government budget would be affected. A transparent solution to the economic status of Australia is needed, and the time has come to start considering alternative options.

The same can be said from the consumer point of view, though, as they can not sit around and wait for the government and central bank to figure out a solution. Bitcoin provides them with a viable alternative, considering how it already has the label of “currency” in Australia, and it is subject to GST.

Moreover, Bitcoin operates outside of the control of central banks and governments, while still providing users with all of the financial services they need. Converting to and from Bitcoin is done relatively quickly, and the digital currency acts as a global payment method. Plus, with a far cheaper cost to pay for goods and services, Bitcoin is well worth considering for Australian consumers.

Source: AFR, Flickr

Bitcoin puts on many different hats, depending on which country it is related to. Some states see Bitcoin as a currency, others as a commodity, and most regions don’t even recognize Bitcoin at all. Things are moving in the direction of recognizing this disruptive technology as a currency with similar traits to fiat currency, though. A new set of bills has been approved by the Cabinet of Japan to recognize virtual currencies as a tool with similar functions to government-issued money.

Also read: Dragon’s Tale – Playing Hide and Seek with Bitcoin

Banks Can Freely Explore Bitcoin For IT Upgrades

First and foremost, the established financial players – banks, insurance companies, and others – will be able to look into the technology that makes Bitcoin tick. Blockchain technology is of great interest to some of the world’s largest banks, yet things were quite different in Japan due to the impending regulation of the whole digital currency concept.

Now that the Cabinet of Japan approved a new set of bills to let banking groups expand their infrastructure through virtual currencies, things can be taken to the next level in Japan. There are plenty of benefits to be found in the world of blockchains, ranging from faster settlement to less overhead costs and automated smart contracts.

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But there is more, as this approval by the Cabinet of Japan grants banks permission to explore virtual currencies as well. This does not mean Japanese banks will suddenly flock to Bitcoin or any of the other existing open source digital currency projects. Instead, they will examine the technology, and determine whether or not they can use it to issue their own virtual currencies in the future.

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Even though the Bank of England recently voiced concern regarding central bank-issued Bitcoin clones, that warning is falling on deaf ears by the look of things. It is positive to see the Cabinet of Japan grant the green light for financial players to explore the world of virtual currencies, albeit it remains to be seen what will be achieved in the long run.

Japan does not want to be left behind in the Fintech revolution, and this set of bills is the first step to achieving that goal. The Cabinet of Japan has granted regional banking groups the right to consolidate their fund and system management and improve business efficiency. Especially that latter part is of great importance, as established banks are facing stiff competition from Fintech startups and digital currencies such as Bitcoin.

Bitcoin is Now Officially Recognized By Cabinet of Japan

What is even more interesting regarding these bills is how Bitcoin is now labeled as “asset-like values which can be used in making payments and digital transfers”. This means Bitcoin is well underway to be recognized as an official currency in Japan, although there is still a long road ahead.

Moreover, Bitcoin exchanges in Japan will need to be registered with the government, and they will be regulated by the Financial Services Agency from now on. Doing so should prevent any money laundering attempt through Bitcoin while also protecting digital currency enthusiasts from financial harm.

Source: Nikkei

Bitcoin can make a big impact in Africa, as the continent lacks a stable financial infrastructure in most areas. On top of that, most African countries are plagued by hyperinflationary fiat currencies, making it that much harder for people to make ends meet. Now that Bidorbuy accepts Bitcoin payments, the digital currency suddenly becomes more appealing to consumers in South Africa and beyond.

Also read: R3 CEV Explores Five Blockchain Service Providers for Banking Purposes

Online Marketplace Bidorbuy Sees Value in Bitcoin

People living in South Africa and other African countries will know the name Bidorbuy, as it is the continent’s largest online marketplace. While it may be a stretch to compare Bidorbuy with the likes of eBay and Alibaba, the platform holds a lot of value as an online marketplace and auction website for the African continent.

Considering how this platform serves over 1 million visitors on a monthly basis, and generates over 30 million page views, there is a growing interest in buying and selling goods online in Africa. That seems only normal, as there are a lot of people accessing the Internet through their mobile device. So much even that the financial industry in Africa is quickly turning into a mobile-only affair.

NewsBTC_BidorBuy

This growth has been noticeable on Bidorbuy as well, as there are over 700,000 items for sale on the platform at the time of writing. Similar to eBay, the platform connects buyers and sellers directly, without acting as a middle man to hold onto the funds. However, a small fee is charged for listing items and successful sales of products.

Bidorbuy has been around since 1999, making it one of the oldest online marketplace and auction sites in the world today. Among the accepted payment methods are traditional offerings, such as credit cards and PayPal. But a new payment method has been added in the form of Bitcoin, which will allow consumers to pay for goods on the platform without needing access to a bank account or plastic card.

That being said, it remains up to individual sellers as to what payment methods they are willing to accept. Not that there is any risk for sellers to accept Bitcoin, as Bidorbuy will take care of the acceptance and conversion to local currency. Sellers won’t even need to set up a Bitcoin wallet to accept this form of payment, and the fact there is no chargeback risk might be enticing enough for sellers to at last give Bitcoin a try. By the look of things, Bitx will be the Bitcoin payment processor during the checkout process.

Bidorbuy can only extend the option to their sellers, but there is no guarantee anyone will accept digital currency payments in the long run. However the company’s willingness to give Bitcoin a chance goes to show this digital currency is far more legitimate than most people give it credit for.

Source: Bidorbuy

Several dozen banks and other financial institutions are focusing their attention on incorporating distributed ledger technology in their existing infrastructure. While there are several different ways to use the blockchain for economic needs, one of the first projects to be thoroughly tested comes in the form of bond trading using distributed ledgers. This concept will be an interesting test for the capabilities of R3 CEV as a blockchain consortium.

Also read: Bitcoin Price Watch; Downside Takes Charge

R3 CEV Meets Banking Infrastructure

The new project saw forty major banks to verify a system for the trading of fixed income using blockchain technology. Among the institutions testing this solution are prominent names in the banking industry, such as Citi and HSBC, both of whom are a part of the R3 CEV consortium.

Many people have been touting the Bitcoin blockchain as revolutionary technology in the financial world, even though distributed ledgers can serve multiple purposes in the long run. Exchanging data over the blockchain is secure and takes place in real-time, and it is of great interest to established financial players.

However, it is important to note R3 CEV and partners do not use the Bitcoin blockchain directly, but rather own versions of the same technology. On paper, such a private blockchain operates in a  similar fashion to the Bitcoin distributed ledger, although it removes the need for mining capacity to keep transactions moving along.

What is of particular interest to financial players is the concept of using smart contracts. A smart contract will let parties execute operations automatically, as the outcome is verified by software, rather than humans acting as an intermediary. Trading fixed income is a good way to test the viability of this approach, especially when considering how five different blockchain technology providers have been used.

R3 CEV CEO David Rutter stated:

“This development further supports R3’s belief that close collaboration among global financial institutions and technology providers will create significant momentum behind the adoption of distributed ledger solutions across the industry. These technologies represent a new frontier of innovation and will dramatically improve the way the financial services industry operates, in much the same way as the advent of electronic trading decades ago delivered huge advancements in efficiency, transparency, scalability and security.”

Every individual blockchain was running a smart contract based on identical business logic, providing a way to benchmark all of the different service providers. Thanks to external partners such as Microsoft Azure, Amazon AWS, and IBM Cloud – all of whom provided cloud mining resources – the test was deemed a success.

The Five Blockchain Service Providers

It is of particular interest how five different blockchain service providers were chosen for this project. Ethereum is at the top of the list and Vitalik Buterin mentioned how it was great to see private and consortium blockchains using the Ethereum codebase actively under development.  

Chain, well-known and respected for their distributed ledger platform and expertise dealing with established financial players was a valuable part of this project as well.Other players include Eris Industries, IBM – through their Blockchain services arm – and Intel’s New Technology Group. All parties involved agree how R3 CEV is advancing and accelerating the adoption of blockchain technology through demonstration, rather than assertion.

Sources: Reuters / Press Release Via Email

Financial institutions have shown a keen interest in the concept of distributed ledger technology, and some countries have even taken the plunge of creating their own national digital currencies. While digitizing fiat currency may seem clear as day to same, it could pose a major threat to the business model of commercial banks. Bank of England is rethinking their plans with blockchain technology for the time being, as all of the risks need to be weighed carefully, especially where the central bank role is concerned

Also read: Japan Set To Reconsider Stance on Taxing Bitcoin

Bank of England Does Not Get Overexcited Yet

At a time during which financial innovation will mean the demise or survival of many banks in the coming years, rushed decisions are the last thing anyone needs. Blockchain technology, which presents distributed ledgers t decentralize a lot of aspects associated with finance, is a powerful tool that can be wielded by anyone in the world. But without proper understanding of what this technology can do, there are a lot of potential doom scenarios to keep in mind.

The Bank of England is one of those financial players keeping close tabs on the progress being made regarding distributed ledger technology. But at the same time, they keep their feet planted firmly on the ground, rather than getting carried away by the concept of creating national digital currencies.

Private blockchains, which is how banks would wield distributed blockchain technology, could very well lead to competitive threats from commercial and challenger banks. After all, the funding of other banks and the supply of credit lines is handled by the central bank as well. At this time, it remains unclear what role distributed ledger technology would play in that regard, yet it could put banking competitors out of business completely.

There are tough times for central bankers, as they are trying to figure out how to keep up with the evolution of finance. Bitcoin, FinTech, mobile, and peer-to-peer solutions are all bringing direct competition to the business model of central banks around the world. A private blockchain would give central banks even more power than ever before, as they will decide who gets access to their balance sheet and who doesn’t.

Bitcoin, the most popular modern digital currency is existence today, has shown how distributed ledger technology can create a financial ecosystem accessible to all. Additionally, everyone can see the total supply of bitcoins – which has a limited supply cap, whereas fiat currency is subject to inflation – and transactions are publicly broadcasted in real-time. Central banks will never adopt this same business model, as they don’t want other banks to figure out where the money is coming from and flowing to.

Central Bank Digital Currencies Are Dangerous

It is impossible to predict the global effect of central bank digital currencies right now, yet the concept can create very dangerous precedents. A lot will depend on how these central bank digital currencies are designed, and how accessible they will be to consumers and other banks. Will they replace the current units of account, will they run in parallel, or is there another strategy at play?

Assuming these creations would ever see the light of day, it will be entirely controlled by the central banks. They can opt to make bank lending more expensive or scarcer, and there is nothing anyone can do about it. This would, in turn, have a big effect on the global economy, which remains on very wobbly legs since the recent financial crisis.  However, there is also a chance the central bank will use digital currency in a “positive” manner, and reduce the demand for physical cash altogether.  

Source: Daily News

Bitcoin is often frowned upon for its alleged lack of regulatory guidelines when it comes to using the digital currency as a method of payment. However, people tend to forget various countries around the world are treating Bitcoin as either an asset or currency and impose taxation upon usage of the digital currency. Japan could be the next country on that list as government officials are pondering over the question of whether or not taxing Bitcoin should be revised. 

Also read: Ethereum Price Technical Analysis 03/02/2016 – Calling For Gains

Taxing Bitcoin Is a Double-Edged Blade

There are a few different factors to take into consideration when it comes to taxing Bitcoin. On the one hand, a tax on digital currency would give more credibility and legitimacy to Bitcoin as a valid form of payment. But on the other hand, consumption tax could stifle growth for Japan in the digital currency space as it would create a less appealing ecosystem for entrepreneurs and startups.

Taxing Bitcoin is not as straightforward as many people would assume it to be. The European Union has declared digital currency entirely exempt from taxation, whereas Australia and several other countries impose a goods and services tax on Bitcoin. This creates an interesting scenario regarding competitiveness, which only makes the job of Japanese financial regulators that much harder.

But there is more to this situation than just that, as Japan is the only country in the so-called “Group of Seven major industrialized countries” to tax digital currency. Whether or not this is a good decision, is being argued by various individuals in Japan, as this ruling affects both businesses and consumers in a negative way.

On the consumer level, buying Bitcoin from an exchange is subject to 8% consumption tax, which is on par with the taxation level of buying physical goods. In doing so, the government seems to be steering people away from getting involved with digital currency, rather than stimulate innovation in the financial sector.

In turn, this creates an uneasy situation for those people running Bitcoin exchange platforms, as they are worried consumers might start looking elsewhere to buy Bitcoin. Digital currency obtained from a foreign exchange would slip through the mazes of the taxation net as they are labelled as electronic information under the local law.

Creating a healthy regulatory ecosystem for Bitcoin and digital currency will not be an easy task. The Financial Services Agency in Japan will soon present their plan to regulate this new breed of finance, although it will have little to no effect on the current way of taxing Bitcoin. While it is evident that Fintech will play a significant role in the financial sector over the next few years, the question remains whether or not regulators will rethink the status of Bitcoin as an object.

Collaboration Will Lead To Change

Albeit the current focus is on whether or not Japan should stick to taxing Bitcoin, there seem to be high hopes for a major get together of influential people come May 2016. The Group of Seven Summit will take place at that time, and the topic of taxing the digital currency could very well be put on the agenda by that date.

Moreover, there is a separate meeting between central bank governors and finance ministers in Japan in the next few months. Considering how both of these events revolve around the impact of financial technology on Japan, it presents an opportune time to collaborate on creating a healthy ecosystem that is beneficial to everyone.

Source: Nikkei, Moyan Brenn

Something strange is going on within the Bitcoin ecosystem, as it has become all but impossible to send transactions to other people by paying a low or standard fee these days. Trouble started brewing when someone figured out how all mined blocks on February 29th were completely full ,leaving no room for additional transactions. Addressing the Bitcoin block size debate will have to happen very soon, before things – and transaction fees – get out of hand even more.

Bitcoin Transaction Gets Stuck For Hours

Whenever somebody sends a Bitcoin transaction with a lower than normal fee, it only makes sense to face a slight delay. The way Bitcoin mining works is by prioritizing transactions based on the transaction fees paid. Low to no transaction fees will usually lead to a delay when waiting for network confirmations, although things never got out of hand as much as they do now.

These days, it is not just the low fee transactions which are faced with network confirmation delays, but the regular fee is no longer sufficient either. This creates a very awkward situation in the Bitcoin world, as the 0.001 BTC fee – worth US$0.43 at the time of writing – is no longer sufficient to get guaranteed confirmations from the next few blocks on the Bitcoin network.

But it is not just the transaction fees that are creating this backlog, as the network blocks mined on February 29th could not take in more transactions. All of the mined blocks were completely full, a strong indication as to how the block size needs to be increased much sooner than people anticipated. As a result, only high priority fees will get transactions confirmed these days, a cost currently sitting at 0.0044 BTC or US$1.90.

With the transaction fees increasing spectacularly to move funds across the Bitcoin network in a quick manner, it becomes even more apparent as to how much the block size debate is hurting the ecosystem right now. Paying close to US$2 per transaction for a money transfer solution supposedly much cheaper than traditional solutions is not acceptable.

By the look of things, there is no improvement in sight anytime soon. The Bitcoin memory pool is full of transactions waiting for network confirmations, and the numbers only keep going up over time. Some people might see this as a sign of how Bitcoin is gaining a lot of popularity, but these confirmation delays are not doing anyone any favors right now.

There is no indication any Bitcoin network stress test is going, like what happened when the Bitcoin XT client started gaining popularity last year. Some people mention how they got lucky and had a transaction confirmed by the next network block while paying regular fees. Others might find themselves waiting for hours, if not days, until the transaction is confirmed.

Will A Block Size Increase Fix The Problem?

Unfortunately, there is no right or wrong answer to this question right now. Yes, a bigger Bitcoin block size would allow for more transactions to be included in every block, and could result in lower transaction fees in the long run. However, it is impossible to confirm whether or not this would be the case, as there is no reason for the sudden flood of Bitcoin transactions hitting the network.

While it is true the block size debate has gone on far too long, a rushed solution might not be the preferable answer right now. The latest Bitcoin Core release includes an option to resend transactions with a higher fee if the user decided to do so, partially solving the problem of delayed network confirmations. But at the same time, a more permanent solution needs to be made available to all Bitcoin users, and it will be up to the developers to do exactly that.

Source: Reddit, Flickr

Blockchain technology enthusiasts are not difficult to find these days, as everyone is seemingly working on some project that has to do with distributed ledgers. While all of this positive attention is a notch in the belt of the blockchain concept, there will be some major challenges associated with using this technology. Changing the world as we know it will not happen overnight, and a mind shift will need to take place before consumers and business fully embrace this solution.

Also read: German Law Enforcement Agencies Shut Down 5 Underground Forums

Blockchain Technology And Legacy Systems

Perhaps the biggest issue to overcome is how well legacy systems and blockchain technology can play together. Both types of infrastructure are complete opposites of the other, and creating hybrid solutions will take some time and effort. Despite the obvious flaws present in legacy systems, people are not too keen on trusting the whole decentralized solution either.

It all starts with gaining a proper understanding of what the blockchain is capable of under the hood. That may prove to be a task that will never be finished, as developers have only scratched the surface of what this technology can achieve in the coming years. A lot of focus lies on the financial side of things, yet some people are looking at blockchain technology as a solution for data storage and record keeping, to name a few examples.

Without a proper understanding of this distributed ledger system, it is all but impossible to integrate it into existing infrastructure. Practical examples of how the blockchain will change everything as we know it are great on paper, but implementing these solutions in the real world is a different matter altogether. It is safe to say this is not part of what they teach IT professionals during their career.

But there is an upside to this problem, as various companies are starting to offer blockchain-as-a-service solutions to their customers. Microsoft, IBM, and Consensys are the frontrunners in this regard, as they have thoroughly embraced the concept of blockchain technology. That being said, even with the proper tools at hand, conceptual understanding of this innovation will be a determining factor in its success.

Moreover, one technical solution that can address a lot of problems across different sectors is both a blessing and a curse. Some industries can relate to certain aspects of blockchain technology better than others, creating additional challenges for everyone interested in this innovative concept. None of these problems are insurmountable, but the mind shift will not happen overnight either.

So Much Potential For Blockchain Technology To Succeed

The technology powering the Bitcoin network offers plenty of potential for success in different industries. Finance will remain the central point of focus as Nasdaq has been running multiple experiments based on this technology over the past few months. Other players in the commercial space are looking to file blockchain-related patents.

Blockchain technology can streamline and simplify day-to-day business processes in just about any industry, once people rightly understand what distributed ledgers are capable of. At the same time, the blockchain brings stiff competition to third-party business models, as buyers and sellers would be able to interact with each other directly using this protocol.

Source: CNBC, Flickr

Ransomware has become a real plague for Internet users all over the world. There is nothing more annoying than using a computer only to have the end user completely locked out due to a piece of malware encrypting all of the necessary files. Various German hospitals have fallen victim to ransomware infections in the past few weeks, and the only option was to pay a Bitcoin ransom so day-to-day operations could continue.

Also read: Bank of Russia Sets Up Taskforce to Explore Bitcoin and FinTech

German Hospitals Fall Victim To Ransomware

Throughout the past few years, various major institutions have fallen victim to the ransomware threat. One of the main reasons why this type of malware targets medical facilities, for example, is because they need access to their files at any given time. As a result, there is a much higher chance of getting the ransom paid in Bitcoin relatively quickly.

German hospitals have seen ransomware infections popping up on their computers in recent weeks, which disrupted healthcare services and made internal systems all but unusable. The only way to circumvent this issue is by paying the associated ransom in Bitcoin, as most types of ransomware prevent users from restoring access through a file backup.

Among the list of ransomware-infected hospitals are Klinikum Arnsberg and Lukas Hospital. Especially this latter one is of particular, as they refused to pay the ransom and pulled the plug on most of their IT infrastructure. Reaching the hospital can still be done over the phone, as it is the only contactless medium that is not connected to computers or the Internet.

Updating patient records is being done the old fashioned way, by relying on paper records filled out with a pen. Internal communication between departments is done by either dropping off files or faxing them around. IT systems in the Lukas Hospital remain completely offline for the time being until the matter can be resolved without resorting to making a Bitcoin payment.

Removing IT systems from the equation in this day and age is causing quite a strain on day-to-day normal operations. Most of the high-risk surgeries have been postponed until all systems are back online, which is quite a risky, but necessary, decision. Klinikum Arnsberg, on the other hand, managed to prevent most of the damage by quickly responding to the infection over email.

Just a week or so ago, the Hollywood Presbyterian Hospital was forced to pay US$17,000 in Bitcoin when they were infected by ransomware as well. Not having access to patient records and schedules is completely unacceptable in the world of healthcare, and the hospital quickly paid the funds to resume their daily operations.

Ransomware Needs To Be Stopped

Even though many people will blame Bitcoin for these ransomware attacks, the digital currency has nothing to do with the hackers’ intent to wreak havoc on computer systems all over the world. It is up to security experts to create a solution for ransomware attacks, and they have been able to do so up to a certain extent.

Paying the ransom fee is still the easiest and quickest way of removing the infection itself, as most types of malware will not allow users to restore a backup. While it is commendable to see both German hospitals refusing to pay the fee – as anyone should – it can take several weeks, if not months, until services are back to normal.

Source: ZDNet