The cryptocurrency industry is currently unregulated and uninsured, making it a haven for digital bandits to plunder and pillage. While there are techniques to safeguard against hacking and theft, some unprotected accounts are still exposed to breaches.
Only a few weeks ago, a Japanese digital exchange was hit with what has been described as the biggest hack in cryptocurrency history. Coincheck Exchange admitted to halting sales and withdrawals of the currency, NEM, after hackers reportedly stole 58 billion yen (£385 million).
According to the exchange, it would be paying back 46.3 billion yen (£305.7 million) to investors. This massive heist is coming at a time when security against crypto-currency thieves is a major cause for concern among many investors. The question remains, how careful should you be?
The importance of internet security cannot be over-emphasised. Security pundits continue to stress it every day. To illustrate its necessity, here is a list of the major cryptocurrency hacks in world history.
1. Bitstamp Hack (January, 2015)
Following the hack of Mt. Gox exchange in the previous year, one of Bitstamp’s storage wallets was raided. The amount stolen was $5.1 million in Bitcoin. Officials who led an investigation into the case attributed the incident to the work of a phishing scam.
The Slovenia-based company also admitted that hackers had stolen 19,000 bitcoins the previous day. While the CEO, Nejc Kodric tried to reassure investors by accepting liability for the breach, he also maintained that most of the company’s bitcoins were in cold storage and safe from fraudsters.
Phishing scams are still a popular method of retrieving user information from a site and modern anti-virus systems are designed to prevent them.
2. Decentralised Autonomous Organisation Breach (June 2016)
A weakness in the Decentralised Autonomous Organisation (DAO) code saw the theft of Ether worth $50 million. It accounted for the significant dip in Ethereum that happened in 2016. The victims were investors in DAO. The company’s unique system of running things included allowing anybody with an investment have a say in which company DAO would fund.
DAO was built on the foundation of Ethereum; a system developed for building decentralised applications. Its system of a democratic financial institution is still relevant today and the company has since set up procedures to prevent financial breach in future.
3. Steemit.com Hack (July 2016)
A month after the DAO hacking, Steem, a social media blockchain was attacked and 260 Steemit accounts were affected. About £85,000 worth of Steem and Steem Dollars were cleared from users’ account. While some investors may think this amount is small in comparison to the other hacks, hackers don’t usually take only money but personal information too.
The company informed its partner Bittrex which worked consistently to investigate the breach and refund customers. Steemit is a block-chain company based on the concept of social media networks. Users who post quality content, comment and vote are paid in Steem cryptocurrency.
4. Bitfinex Hack (August 2016)
The year 2016 was generally bad in cryptocurrency history. Few months later in August, Bitfinex was hacked and Bitcoin worth $72 million was stolen from the Exchange. The breach occurred through a vulnerability in one of the multi-signature wallets in Bitfinex.
Customers felt the main brunt despite having certain features in place like the two-factor-authentication system. Conversely, monies transferred to the exchange after the hack were announced as secure. The exchange later released details to expectant customers as well as the terms for refund.
The price of Bitcoin diminished so much during the period that it was attributed to the Bitfinex Hack. The value of prices fell by 20%, plummeting as low as £480 USD before it recovered on its term.
5. Coin Dash Hack (July 2017)
Coin Dash started off badly in 2017 when a hacker convinced users on their website to exchange Ether for their Coindash tokens. By manipulating an address, he was able to get them to reroute their cryptocurrencies to a phony address.
They (hackers) got away with Ether worth $7 million. According to Crypto Coin Judge, the problem was caused by the negligence of cyber security at the time.
Startups like Coin dash, at the time, build on blockchains and raise sufficient funds in exchange for tokens that allow buyers to access their network when it is launched. CoinDash was hoping to raise $12 million but the sale only generated $6.4 million.
6. Parity Hack (July 2017)
Parity was hacked in the same month Coin Dash was attacked. The hacker discovered a loophole in the Parity Multisig Wallet and exploited it. The access got the hacker into the ICOs of Casino, Edgeless, Aeternity and Swarm City blockchain. Incidentally, “white hackers” use the opportunity to mop up what was left of users’ funds while protecting their accounts.
The total amount they stole was $32 million worth of Ether. The Exchange operates as a community and asked users to investigate when activities appear unusual, including when a user appears to access certain parts of the accounts meant for authorised users.