ACG-CYBER SECURITY BULLETIN NO. 113 UNDERSTANDING BITCOINS
The following information was obtained from the different cyber security sources for notification to all parties concerned pursuant to the mandate of the Philippine National Police Anti-Cybercrime Group (PNP ACG).
The information provided was classified as Restricted pursuant to the PNP Regulation 200-012 on Document Security and Impact Rating as high based on PNP Information Communication Technology (ICT) Security Manual s.2010-01 p. 22 and p.129.
Bitcoins are electronic currency also known as cryptocurrency. It is a form of digital public money that was created by painstaking mathematical computations and monitored by millions of computer users called miners.
Bitcoin allow users to send and receive funds directly to each other without requiring a bank or other payment processing intermediary to facilitate the transaction. It is considered a peer-to-peer system based on blockchain technology which maintains a public ledger of all transfers on the bitcoin network while preventing fraudulent activity such as double spending.
A bitcoin wallet is a software program where bitcoins are stored and a transfer of value between bitcoin wallets is called a transaction. All transactions are included in a block chain. The bitcoin wallet keeps a secret piece of data called a private key which is used to sign transactions, providing mathematical proof that they have come to the owner of the wallet.
The Bangko Sentral ng Pilipinas (BSP) does not endorse the use of bitcoin since it is neither issued or guaranteed by a central bank nor backed by any commodity but it regulates virtual currencies when used for delivery of financial services, specifically for payments and remittances which have an impact on anti-money laundering and combating the financing of terrorism, consumer protection and financial stability.
PNP personnel and the public are advised to follow the tips when dealing with bitcoins:
- Keep separate wallets. There is no limit to the number of bitcoin wallets, have a separate wallet for spending money and a separate address for receiving payments.
- Do not keep your savings in a web wallet even though it is convenient.
- Always remember, bitcoins do not work like credit card. If you lose money fraudulently, nobody can send a refund.
- Protect your privacy. Never share your private keys with anyone else.
- Keep your wallet’s private key stored in an offline medium.
- Always keep a backup of your wallets.
For additional information, please refer to the following websites:
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