Three Crypto Exchange Hack Events Is Wakeup Call To Bitcoin Investors And Traders
Despite being tagged a security conscious and hack resistance technology, cryptocurrency/blockchain is sometimes intruded by hack on crypto exchange platforms and people are beginning to have a rethink on the celebration centered around the technology as their funds get carted away.
The question to ask here is which of the two entities is to be blamed; cryptocurrency or exchange platforms?
After deciphering most of the hack cases, many have opined that events like these are majorly not the fault of the technology, and the cryptocurrency exchanges are to be blamed.
Beyond Cryptocurrency, blockchain technology has be credited to be failsafe especially when it comes to data management, resistance to theft and fraud, but the exchanges and users of the technology seems to be at the vulnerable end, exposing the technology to much danger.
Evident of this, it is pertinent to carefully select the best exchange that is worthy enough for assets storage, to prevent paying heavy levies for choosing wrong or vulnerable exchanges.
Musing over the hack events which took place on three of the biggest crypto exchange platforms, one would realize what really went wrong.
Mt. Gox (Magic The Gathering Online Exchange)
Before now, the world’s largest crypto exchange platform as at 2014, which used to be responsible for more than 70% of all Bitcoin’s transaction, was been infiltrated by attacks.
In 2011, the giant exchange, Mt. Gox, witness as huge disaster which resulted into the carting away of huge amount of Bitcoins by hackers.
Not enough to be a deterrent, the year 2014 marked the siphoning of $473 million worth of BTC from the same platform. The dough accounted for 7% of the world’s total supply.
This did not just hit the exchange, but cryptocurrency in general was affected, slamming the price of Bitcoin into the pit, and many lost faith in the viability of the digital currency. The event brought bad press to the crypto industry, and may users lost massively from their hard earned wealth.
The next question is how did it happen? Fundamentally, it was observed that the exchange had quite some problems which were left unattended to, and that led to the attacks.
Apart from the fact that the exchange did not test its code, it lacked Version Control Software at that time, and this affected the tracking and managing of changes made to code. Overall, there was a poor organization from the exchange.
These made the exchange susceptible to attack, as hackers leverage on transaction malleability. The hackers effectively fabricated a scenario where transfer of Bitcoin to an address did not reflect, whereas, they had made successfully transferred a huge sum.
Due to the massive attack, the exchange packed up and its founder Mark Karpeles was sent behind the bar for different charges.
The tragic event will continue to serve an example for people in choosing and managing an exchange.
About 15 million Railblocks (XRB), Nano network currency, was pilfered from the Italian based exchange Bitgrail on February 8, 2015
More than $150 million worth of XRB was lost in the attack, and it placed the Nano team in dismay. Although Bitgrail, later filed a suit against Nano, but in the initial ground, the claim was that the exchange failed to handle its network securely, and rather relied hot wallet to store its XRB. Due to the online storage nature of the method which the exchange relied on, it is regarded as a more susceptible recipe compared to others.
Many exchange must have learnt lesson(s) from the disaster, and make sure the wallet they use is well secured. Similarly, users are also implored to choose the right exchange that store assets in a secured place.
The last on the list here is the biggest is the scam in the history of Cryptocurrency.
On January 26, 2018, not less than $534 million worth of NEM coins which is equivalent to 523 million NEM was on carted away from Coincheck exchange in a theft case. Due to the size of the dough involved, the saga drew attention from far and wide.
After a proper appraisal of the matter, the attack was found similar to Bitgrail’s. Instead of keeping its NEM assets on a secure multi sig wallet, Coincheck made use of a hot wallet.
Even though, the exchange promised to remunerate the 260,000 victims of the hack, about 100 of them still filed a lawsuits against Coincheck.
Yet all this did not affect the existence of NEM blockchain.
This is another reminder for people and owners of exchanges, calling them to attention to carefully follow the right procedure in storing assets.
As crypto adoption around the world moves towards mainstream and people continue to store more and more wealth with the digital currency, events like this will never cease from existing and such will appear as a dagger in the hearth of investors.
Evident of this, there is no reason for people to rely on vulnerable exchange. To prevent falling into the hands of unsafe exchange, users need to take to some simple advice.
Searching for the right exchange that has excellent trading and security record is important. While vetting exchanges, one should check the security policy of the exchange, and know how responsive the exchange is to crises. Also, it is necessary to know the best way to store assets on exchange.
An example of an excellent crypto exchange platform that has good history with no hack record is Binance. Binance, in its guide statement in fact noted that its team has on several occasion intercepted hackers and their accounts were confiscated, donating their dough to charity.
To mitigate the worries of coin theft, users need to research well in picking the right exchange.