Bitcoin keeps dropping down recently and its drop in value is actually a concern of a lot of people. So, why the value of the legend of crypto bitcoin and other crypto currency keeps dropping?
The reason behind the previous bitcoin value drop was mostly related to the critics and decisions from the Tesla company founder Elon Musk about the bitcoin. But the reasons behind the recently drop is far away from the previous reasons. You will be very surprised to know that the actual bitcoin drops in value have something to do with the FBI.
A hacking organization from Russia recently hacked and disabled the control system of the major oil pipeline firm in the western United States, forcing the firm to cease most oil transportation in the region and prompting the US government to declare a state of emergency. In order to restore the oil supply as soon as possible, the colony pipeline company was eventually forced to pay about $5 million worth of bitcoin to the hacking organization in exchange for its own system control.
However, just before the hacker organization transferred the ransom, the FBI successfully found the wallet key to store the ransom, transferred most of the bitcoins to the official account, and recovered nearly half of the loss. Why is it nearly half? Because of the impact of currency prices, the total price of recovered bitcoins has been much lower than the price paid before.
The allegedly untraceable and completely decentralized bitcoin transaction was successfully recovered, which directly caused another shock in the bitcoin market. Some people said it proved that the so-called decentralization of bitcoin is actually a scam. The end is here, so what is the truth?
How did the FBI recover Bitcoin?
According to the FBI investigation, the recovered bitcoins accounted for around 80% of the total payment, with the remaining 20% being temporarily unavailable due to various factors. Furthermore, the FBI's recovery action debunked the Bitcoin money laundering myth once again, demonstrating that Bitcoin transactions can be traced to some extent.
However, the FBI’s process of recovering Bitcoin is different from what everyone may think that the FBI directly cracked the encryption algorithm of Bitcoin, thereby withdrawing the Bitcoin in the hacker organization bitcoin wallet. The FBI's ability to recover Bitcoin is based on its own control over US-based server businesses and knowledge of the Internet. Furthermore, the hacker organization, which has conducted assaults on various firms in the past, was reckless. Because, according to an FBI report, the ability to recover Bitcoin this time was kind of luck.
Note that until now, the FBI cannot directly crack Bitcoin wallets, because the SHA256 algorithm used by Bitcoin wallets is one of the current mainstream encryption algorithms. The SHA256 algorithm is not only used by Bitcoin, but also by major banks and financial institutions in the world. Most organizations use similar algorithms to encrypt networks and systems.
If the algorithm is cracked, then what we should worry about is not Bitcoin, but whether the global financial system will collapse overnight. Moreover, the SHA256 algorithm itself is almost impossible to be cracked.
As a hacker organization that has committed dozens of crimes, Dark Side is also laundering the bitcoins obtained this time through a series of private and public wallets, and the public wallets belonging to the FBI are hidden in these wallets. When the people from Dark Side transferred the ransom to the wallet, they were discovered by FBI agents who had been monitoring the wallet status. After obtaining the judge’s permission, they quickly transferred this part of the bitcoin to another wallet controlled by the government, relying on the wallet’s private key.
At least, Bitcoin itself is still safe at the moment, but if you want to withdraw or launder the Bitcoin after obtaining it, you will face numerous obstacles. For example, in the high-profile global ransomware virus in the past few years, many of the bitcoin ransoms obtained by the virus creators still cannot be withdrawn, and they have been strictly monitored by the government.
Bitcoin is safe, why does it still cause the price to drop?
First of all, the price of Bitcoin has been unstable recently, and a slight disturbance may lead to a sharp drop or skyrocketing. However, this time it was indeed a drop due to the news that the US FBI had recovered the bitcoin ransom from hacker organization.
Although many people regard Bitcoin as a pure investment, there are still many investors, companies, or organizations that secretly purchase it as a currency that evades the tracking of real financial institutions. This part of the institutions may sell their bitcoins afterwards, either due to panic or for other purposes. The fall in the price of the currency in turn triggered the selling of other scattered investors and institutions, and finally made the price of bitcoin to drop.
Furthermore, most Bitcoin investors don't actually know Bitcoin itself, so when similar major unfavorable news comes out, it is a normal thing for investors to panic and then start selling their bitcoins.
In fact, for most Bitcoin traders, as long as the transaction is conducted through an exchange, it is basically open and transparent, and the exchange can easily find information on both parties to the transaction. This is also why after the domestic tightening of the supervision of virtual currency some time ago, many traders have been frozen because of the black money involved in the transaction.
What’s more interesting is that when Bitcoin’s creator Satoshi Nakamoto gave it the features of decentralization, he also gave it the characteristics of open transactions. Bitcoin transactions between all blocks have to be broadcast, which is equivalent to publishing all transaction information to anyone who want it, so making private transactions impossible (unless the entire wallet is directly traded).
In conclusion, the price of bitcoin will drop down as soon as a negative related news will be released regarding to it. The opposite also applied, when positive news about bitcoin is released, it will rise up in value even skyrocket to $100k.