Here is the 'bad' stuff from the 'Bitcoin' wiki page
wikipedia.org wrote:
Criminal activity
Bitcoins have become linked to online criminal behavior and so-called cybercriminals. Used to obfuscate online transactions, bitcoins are seized when dark web black markets are shut by authorities. The association with criminal activities has stigmatized the currency and attracted the attention of financial regulators, legislative bodies, and law enforcement. CNN has referred to bitcoin as a "shady online currency [that is] starting to gain legitimacy in certain parts of the world," and the Washington Post calls it "the currency of choice for seedy online activities." The FBI stated in a 2012 report that "bitcoin will likely continue to attract cyber-criminals who view it as a means to move or steal funds".
Criminal activity involving Bitcoin has largely centered around theft of the currency, money laundering, the use of botnets for mining, and the use of bitcoins in exchange for illegal items or services. Certain nation states may feel that its use in circumventing capital controls is also undesirable. Despite claims made by the non-profit Bitcoin Foundation that "cryptography is the reason no one can steal bitcoins," theft is widespread.
Black markets.
Several news outlets assert that the popularity of bitcoin hinges on the ability to use them to purchase illegal goods. C. 2013 Non-drug transactions were thought to be far less than the number involved in the purchase of drugs, and roughly one half of all transactions made using Bitcoin were bets placed at a single online gaming website. Some also state that online gun dealers use Bitcoin to sell arms without background checks. In 2012, an academic from the Carnegie Mellon CyLab and the Information Networking Institute estimated that 4.5 to 9% of all bitcoins transacted were for purchases of drugs at a single online market, Silk Road.[133] As the majority of the Bitcoin transactions were then speculative, the academic asserts that drugs constituted a much larger percentage of the purchases with the currency.[133] Silk Road was later shut by US law enforcement. Some feel dark web black markets are operated in order to steal bitcoins from shoppers. The Bitcoin community branded one site, Sheep Marketplace, as a scam when it prevented withdrawals and shut down after an alleged bitcoins theft. In a separate case, escrow accounts with bitcoins belonging to patrons of a different black market were hacked in early 2014.
Money laundering
While some feel bitcoins are not ideal for money laundering because all transactions are public, authorities have expressed concerns. The European Banking Authority and the FBI have both stated that Bitcoin may be used for money laundering. In early 2014, an operator of a US bitcoin exchange was arrested for money laundering.
Ponzi scheme
Critics have accused Bitcoin of being a Ponzi scheme, though Bitcoin supporters disagree A 2012 case study report by the European Central Bank noted that Bitcoin shares some, but not all, characteristics of Ponzi schemes and concluded that "it [is not] easy to assess whether or not the Bitcoin system actually works like a pyramid or Ponzi scheme."
In an alleged Ponzi scheme that utilized bitcoins, The Bitcoin Savings and Trust promised investors up to 7 percent weekly interest, and raised at least 700,000 bitcoins from 2011 to 2012. In 2013, the SEC charged the company and its founder "with defrauding investors in a Ponzi scheme involving Bitcoin..."
Thefts
While generating and storing keys offline mitigates theft of bitcoins, thefts occur on a regular basis. Theft occurs when an unauthorized transfer of bitcoins is made from a wallet using the private key to unlock the wallet. Most large-scale thefts occur at payment processors, exchanges, or online wallet services that store the private keys of many bitcoin users: The thief hacks an online wallet service by finding a bug in its website or spreading malware to computers holding the private keys. When they have control of the website or its database, they gain access to many users' private keys and can thereby steal those users' bitcoins.
Many high-profile bitcoin thefts have been reported: In late November 2013, an estimated 96,000 bitcoins, then valued at around $100 million, were stolen from the online illicit goods marketplace Sheep Marketplace, which immediately closed. Users tracked the coins as they were processed by the bitcoin exchange BTC-e, where they were apparently converted to cash, but no funds were recovered or culprits identified. A black market called Silk Road 2, stated that during a February 2014 hack bitcoins valued at $2.7 million were taken from escrow accounts. On February 28, 2014 Mt. Gox, one of the world's biggest virtual currency exchanges filed for bankruptcy in Tokyo after its computer system was hacked and lost 850,000 bitcoins (750,000 of customer bitcoins and 100,000 of Mt. Gox own bitcoins) worth approximately $477 million at the time, representing around 7 percent of the world's supply.
Flexcoin, an Alberta, Canada-based bitcoin storage specialist, shut down on March 3, 2014 after it said it discovered the theft of 896 bitcoins, worth roughly $650,000. The theft exploited a software flaw handling multiple, rapid inter-account transfers. The company differentiated itself by incentivizing users to store bitcoins on their website. Only bitcoins stored in hot wallets (i.e., connected to the internet) were stolen, and the company said it would return customer bitcoins kept offline in cold storage, an optional service that was available for a 0.5% fee. Poloniex, a digital currency exchange, reported on March 4, 2014 that it lost 76.69 bitcoins to hackers, or 12.3% of its bitcoin holdings, valued at around $50,000. Multiple withdrawals were placed at nearly the same time in the attack, and the exchange did not adequately guard against negative balances. Poloniex said it would reduce customer account balances by 12.3%, and repay the deductions in the future.
Malware
Bitcoin-related malware includes software that steals bitcoins from users using a variety of techniques, software that uses infected computers to mine bitcoins, and different types of ransomware, which disable computers or prevent files from being accessed until some payment is made.
Unauthorized mining
In June 2011, Symantec warned about the possibility that botnets could mine covertly for bitcoins. Malware used the parallel processing capabilities of GPUs built into many modern video cards. In mid-August 2011, bitcoin mining botnets were detected again, and less than three months later, bitcoin mining trojans had infected Mac OS X. In April 2013, electronic sports organization E-Sports Entertainment was accused of hijacking 14,000 computers to mine bitcoins; the case was settled in November with a fine of $325,000 increasing to US$1 million if the organization were to break the law within the following ten years. While bitcoin mining on an average PC is no longer lucrative, botnet networks of tens of thousands of infected computers can mine for bitcoins without concern for power costs. German police arrested two people in December 2013 who customized existing botnet software to perform bitcoin mining, which police said had been used to mine at least $950,000 worth of bitcoins. For four days in December 2013 and January 2014, Yahoo's European servers served an ad that contained Windows bitcoin mining malware which infected an estimated 2 million PCs. Bitcoin-mining botnet software called Sefnit, first detected in mid-2013, was bundled with many software packages; Microsoft has been removing the malware through its Microsoft Security Essentials and other security software since January 2014.
Malware stealing bitcoins
Security company Dell SecureWorks said in February 2014 that they had identified 146 strains of bitcoin malware in circulation, almost all of it targeting Windows users, and about half of the malware undetected by standard antivirus scanners. The most common type searches computers for cryptocurrency wallets to upload to a remote server, where they can be cracked and their coins stolen. Many of these also log keystrokes to record passwords, often avoiding the need to crack the keys. A different approach taken by some malware is to detect when Bitcoin addresses are copied to a clipboard, and replace it with a different address, tricking people into sending bitcoins to the wrong address.
One virus, spread through the Pony botnet, was reported in February 2014 to have stolen up to $220,000 in cryptocurrencies, including 335 bitcoins, from 85 wallets. Security company Trustwave tracked the malware since September 2013, reporting that it had also stolen millions of passwords to various websites, and that its latest version was able to steal from 30 types of digital currency wallets.
A trojan horse for Mac OS X, called CoinThief, hidden in versions of some cryptocurrency apps on Download.com and MacUpdate, was reported in February 2014 to be responsible for multiple bitcoin thefts, including one user who lost 20 bitcoins. It bore similarities to a piece of Mac malware active in August 2013, Bitvanity, which posed as a vanity wallet address generator, and stole addresses and private keys from other Bitcoin client software.
Ransomware
Another type of Bitcoin-related malware is a type of ransomware. A program called Cryptolocker, typically spread through legitimate-looking email attachments, encrypts the hard drive of an infected computer, then displays a countdown timer and demands a ransom, usually two bitcoins, to decrypt it. Police in Massachusetts said they paid a 2 bitcoin ransom in November 2013, worth more than $1300 at the time, to decrypt one of their hard drives.Linkup, a combination ransomware and bitcoin mining program that surfaced in February 2014, disables a user's internet access and demands credit card information to restore it, while secretly mining bitcoins. Researchers at Emsisoft did not test whether entering the information really restored internet access.
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