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INET Hakin9 36 - Issue 11 of Uploaded By herxx Without their assistance there would not be a Hakin9 magazine. SK Warszawa, ul. Bokserska 1 Phone: 1 Whilst every effort has been made to ensure the high quality of the magazine, the editors make no warranty, express or implied, concerning the results of content usage. All trade marks presented in the magazine were used only for informative purposes. They will tell us about bitcoin, how it works, the security side of Bitcoin and ways that Bitcoin could evolve in future.

With Bitcoin are also related other project that make this cur- rency more attractive and safer to use. Doug Feigelson has told us about his project bitbills.

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If you are interested in Bitcoin, you have to read the article written by Rebecca Wynn. She is showing why in her opinion Bitcoin is destined to fail. I know that many of you, dear re- aders, will disagree, but that is the point! Send US your com- ments, the most interesting will be published. Maybe you are the owner of some internet shop? From this Hakin9 StarterKit you will gain the knowladge on how to secure your Bitcoin wallet, add Bitcoin payments into your internet shop and learn how that currency work.

SK Warszawa, ul. Bokserska 1 Phone: 1 www. All trade marks presented in the magazine were used only for informative purposes. All rights to trade marks presented in the magazine are reserved by the companies which own them. The techniques described in our articles may only be used in private, local networks.

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The editors hold no responsibility for misuse of the presented techniques or consequent data loss. In a while I connect to any website and bought me something. What is that?

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Perhaps the opinion of my friend is the most common to- day when talking to citizenship about bitcoins. Many people remember the tricks of Internet advertising pyra- mid at the end of last century, or checks from the webmasters sent after clicking on the advertising links. Newest often leads to user resistance, and this system is no different. In this article we will know where bitcoins come from, their future, how to get them, what can we do with them, and most importantly, how to protect them.

What are the BitCoins? Conceptually, BitCoin BTC is an electronic currency with a feature that makes it very interesting to the general public, its decentralization. That is, there is no central authority that can influence the up or down in value, and also the way it works is through P2P networks. The first mystery of BitCoin begins with its creator, in fact, different media speculation that Satoshi Nakamoto is a false identity, since no one by that name has par- ticipated in discussions or in subsequent projects with free soft- ware one of the creators of the software BitCoin, Gavin Andresen.

Before the article by Satoshi Nakamoto, similar ideas were embodied in documents, and even in movies, how can we for- get the concept of credit from the science fiction classic film Blade Runner Operation BitCoins need to work with with the concept of a wallet. In the case of the application BitCoin, once it is opened, Bit- Coin will automatically assign an address based on a hash key for each team.

BitCoin mMining for bitcoins will be explained later. Image 1: BitCoin identifer The virtual wallet is stored in the application directory in a file called wallet. Once you have installed the program, it will automatically download the blocks and start the mining process. From a technical point of view, the application uses port , the BitCoin default for downloads and P2P network connections and the first time you start connecting to an IP address to per- form various management tasksof the new account.

So, if we scan a range of IP addresses, and we find that port is open, we may assume that a mate whothat IP address has uses BitCoin running. Each block contains the latest transactions, a random number and the hash of the previous sequence, thus forming a chain of blocks. A block is considered issued and valid for all nodes when the SHA hash of the entire block is below the current target marked by the network.

The number of BitCoins generated by each new block begins at 50 and will be divided between two blocks of , , with the current number of blocks , But that is not here, since the gain is twofold.

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If in the new gener- ated block s transactions exists , BitCoins fees may be claimed by the producer of the block, also known as the miner. Mining Just like the older style of the American Gold Rush, Its time for mining but rather than extracting gold, we generate hashes for new blocks in the BitCoin P2P network using the processing capacity of our computer. Image 2. When we agree to engage in commerce using a particular currency, we both rely on who- ever has issued that currency be it a central government in the case of bank notes, or my personal reputation in the case of a cheque that I write in order to ensure that it re- tains its value.

In the latter part of the twentieth century, technology, in the form of encryption, has allowed the process of trust between two parties to be defined mathematically. Public key encryption has only been around for a few decades, but it has already had a massive impact on our day to day lives, often in ways that arent immediately apparent.

There has been a tremendous amount of press in the past year on the topic of BitCoin, a virtual, digital currency that relies on mathematical encryption and socalled trust met- rics in order to ensure the value and validity of the token of exchange. A trust metric is a way of measuring the relative trustwor- thiness of someone or something, based on the list of others that trust or do not trust it.

One example of a trust metric is Googles PageRank algorithm, which measures the im- portance of a web page, based on who is linking to it. There are many different kinds of trust metrics that are designed to measure different aspects of trustworthiness.

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Some of those are well defined mathematically, and can be implemented by computers. So how do they work? Most of the currency youve ever handled or heard of was probably issued by a central authority of some kind. The process of two people making some kind of exchange has always relied on trust; if you dont know me, how do you know that I wont cheat you in a transaction?

Fig 1: The BitCoin Windows client. Transactions, identifers and amounts have been blanked out. Note the simplicity of the user interface, the information about blocks and confrmations of transactions. Fig 2: Sending BitCoins to another wallet is simply a matter of pasting in their address i.

The nodes in the system who are dedicated to this purpose are known as bitcoin miners, and as a reward for spend such effort on this activity, the block producer gets a bounty of some number of bitcoins, which is agreed-upon by the network. Currently this bounty is 50 bitcoins; this value will halve every , blocks. The network rules are such that the difficulty level is adjusted to keep block production to approximately 1 block each10 min- utes.

As the amount of miners engaged in the mining activity rises, the more difficult it becomes for each individual miner node to produce a block. With the rise of the activity, the difficulty level has increased significantly making very hard for solo min- ing to compete against mining pools, where most miners join to create a very strong collective processing power. This means, depending on the power of the equipment youre planing on using to mine bitcoins, you can do it solo or in a mining pool. This power is usually measured by the capacity to process in hash per second, a simple computer with a high-end video graphics card can do it from 5.

Very differently from most currencies, where the power and decision to make more money are held on the hands of central and commercial banks along with governmental interests, the bitcoin system has a very open and decentralized production where most home and game computers are capable to join the activity known as bitcoin mining.

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Table 1. Amir: The most important part of Bitcoin is its large distributed database.

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  7. When you are using bit-torrent, you find the movie and you are downloading by connecting to other person and down- load that persons movie file. In Bitcoin you are not download- ing different files from different people, you are downloading the same file. That file describes the flow of transactions through the whole network from this inception, so you can see that money been spent once. Now the way that database is stored is in the form of blocks.

    As these machines are generating, they solve hard mathematical problems. Every time they solve a mathemati- cal problem, they create a block, and these blocks are added to the network. All blocks in the network are chained together in one long to form the blockchain. The block headers contain a hash of previous block.

    So second block has a hash of first block, third block has a hash of second block, and so on. Miner computers are generating the blocks, and verifying transactions. When you create transactions in Bitcoin they are sent out to the network, its floating about until all these miners or verifiers, picks up the block and adds it to the new block they generate. More blocks are built on top, and for every block that has been added to pre- vious block, its harder to reverse these blocks because it comes imbedded deeper and deeper.

    So when you touch your transac- tion to the block that has confirmation of one, and for every block that add of top of this, confirmation goes up by one and it gets exponentially harder to reverse the transactions.

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    Hakin9: Wallet fle is storage on personal PC, Is there a possibility that some high skill programmer or a hacker could create false Bitcoins? Patrick: Its effectively impossible. You will have to significantly reduce the difficulty of calculating in SHA Hash.

    Right now if you calculating million of them per second, it will probably take about a year to generate one block. So in order to create fake money the only way too do that is to go and mine. You end up not creating anything fake at all except real coins. A: You cant create fake money. Lets say that you have one block, to create a double spend money you would have to gen- erate another block, now you have too P: Split the chain A: Someone sees that you spend the money and goes to anoth- er block and then you make fake blocks, so you build it instead of building the last block and you fork the chain.

    Whole thing is that Bitcoin accepts the block which is most difficult too produce, usually is that chain which is longest. Within a few seconds I had a complete list of all the machines on my network. Selecting one of my Windows 7 systems from the menu I performed a deeper nmap scan. The scan found no open ports, and it could not provide much information about the client. And within seconds I was viewing a list of all the webpages that my Windows 7 wired client was visiting, remotely on my droid tablet!

    And sure enough, the attacking machine switched its MAC address for the client gateway. Notice the change in the Physical MAC address for the gateway machine.