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You might think being part of the worst hack in Twitter’s history would be a blight for Bitcoin and other cryptocurrencies, which were already associated with scams, grifts, and general sketchiness. Or, if you happen to own some, you might see it as a vindication.
On Wednesday afternoon, a hacker or hackers hijacked dozens of the platform’s most prominent accounts—including those belonging to Bill Gates, Jeff Bezos, Barack Obama, and Kanye West—to disseminate a Bitcoin scam. For hours, these celebrity accounts posted the same message promising to double peoples’ returns if they sent $1,000 in Bitcoin to a wallet. The scam eventually netted the hackers $120,000, a relatively paltry sum given the number and visibility of the accounts that they were able to access. The FBI has launched an investigation into the hack, as has the state of New York.
In the aftermath of the hack—which caused wider disruptions on Twitter, including the temporary suspension of every verified user’s ability to tweet so that the company could contain the chaos—the cryptocurrency community has been careful to frame the incident as a Twitter problem, not a Bitcoin one. Preston Byrne, a partner at the law firm Anderson Kill who focuses on cryptocurrency, acknowledges that the hack could deepen Bitcoin’s shady public image, but he contends it’s unfounded. “The reality of the situation is that committing a crime with Bitcoin is an extraordinarily stupid idea, given the fact that no transactions are private, the ledger is auditable, and U.S. law enforcement has the ability to trace these transactions with a very high degree of accuracy,” Byrne said, adding that this was a financial scam that could’ve involved any type of currency. “Someone could have perpetrated it with U.S. dollars, with checks in the mail. It just happens that we live in a digital age, so it was perpetrated on a digital platform with digital money.” Scandals in the Bitcoin space like the theft of $460 million from the Mt. Gox exchange platform in 2014, pump-and-dump schemes, misleading cryptocurrency ads, and the use of cryptocurrency for illicit activities like narcotics purchases have earned the technology a dubious reputation, even as it has attracted the attention of mainstream financial institutions and Facebook.
Does the Twitter hack belong on the list of crypto lowlights? Some of the experts I checked in with this week said that, actually, they saw some advantages to this bout of notoriety. “Unfortunately, the awareness [for Bitcoin] came from a hack of these celebrities and prominent business officials that have millions of followers,” says Joe Vezzani, founder of LunarCRUSH, a platform that monitors social media activity around cryptocurrency. “But the interesting part about it is: Can you imagine if an advertiser wanted to ask all of these people to post about their company in one fell swoop? It would be an impossible purchase; you couldn’t even buy that much media.”
Based on its monitoring of Twitter, Reddit, YouTube, and Medium, LunarCRUSH found that there were more than 550,000 social posts about cryptocurrency in the 24-hour period after the hack occurred, beating records that the platform had previously recorded. At 6 p.m. EST on Wednesday, roughly two hours after the hack, there were more than 100,000 people simultaneously posting about Bitcoin, another record according to LunarCRUSH. “All press is probably good press, because people are learning about it,” Vezzani said. “I think it’s a positive thing overall for Bitcoin.”
Some cryptocurrency evangelists argue that the particulars of the hack also highlight the strengths of the technology, such as its decentralized infrastructure. “What this story is really about is the compromise of having a centralized service,” says Andreas Antonopoulos, a cryptocurrency entrepreneur and advocate whose Twitter account was among those hacked. “The reason Bitcoin can’t be hacked is because it doesn’t have a single point of failure like Twitter does.” (All the computers participating in the Bitcoin network jointly process transactions so that no one actor has too much power.) People have had Bitcoin stolen from cryptocurrency exchanges, though this largely applies to unsecure wallets rather than the transactions themselves.
Antonopoulos also claims that the fallout from the hack speaks to the resiliency of Bitcoin. The cryptocurrency’s value, currently around $9,000 a Bitcoin, did not significantly fluctuate as a result of the hack. Antonopoulos believes that this is simply because people have realized that Bitcoin is a useful payment method and aren’t easily swayed by sensational events like this hack. “Bitcoin doesn’t depend on approval, reputation, acknowledgement, accolades, marketing, feel-good stories, or promotion,” he says. “It has actual utility and is an actual working system that is robust against all kinds of attacks, including attacks on its reputation.” While Bitcoin has historically experienced large price fluctuations, it has recently stabilized in the $9000 to $10,000 range.
Cryptocurrency experts hope that amount of attention that the hack garnered will help raise awareness about cryptocurrency scams and how to spot them. “A lot of times people recognize this type of scam because they’ve seen it before, but they probably couldn’t believe their eyes when it was actually coming from the authenticated check-marked account of some of these celebrities,” says Vezzani. “I think that’s really what threw people off, but this definitely now a nice way to protect people against something like this. People will never be sending money to someone who they don’t know [after this hack].” Antonopoulos further pointed out that the hackers first took over cryptocurrency-related accounts belonging to companies like Gemini, a digital currency exchange owned by Tyler and Cameron Winklevoss. The scam had limited success at this stage, which Antonopoulos attributes to the fact that people who follow cryptocurrency accounts are likely savvier when it comes to the associated scams. It was only when the hackers began targeting celebrities with broader followings that they made most of their money.
Future Tense is a partnership of Slate, New America, and Arizona State University that examines emerging technologies, public policy, and society.
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