It has been reported that more than 14 percent of the Bitcoin and Ether supply have been compromised.
Unfortunately this happens all too regularly, and in less than a decade, hackers have stolen $1.2Billon worth of Bitcoin and Ether. Lex Sokolin, who is the global director of Autonomous Research LLP, said;
“It looks like crypto hacking is a $200million annual revenue industry.”
So, why does hacking happen. Cryptocurrencies work on a blockchain technology, and once these records are shared, it is incredibly hard to alter them, leaving many to believe that they are actually super-secure; but, in reality, they are no safer than any other software, and are often left open to the risk of hacking.
They can track your identity, property records, and digital car keys, having the potential to affect much more than just your cryptocurrency. SO, whilst it might be harder to initial break into the blockchain, once they are in, they have access to a lot more than something physical.
Despite blockchains claiming to prevent this, researchers at the Institute of Electrical and Electronics Engineers outlined that hackers can actually spend the same Bitcoins twice. The researchers wrote;
“We have no evidence that such attacks have already been performed on Bitcoin…However, we believe that some of the important characteristics of Bitcoin make these attacks practical and potentially highly disruptive.”
When looking at Ethereum, a research found vulnerabilities. They discovered a bug that ‘can lead to the leak of sensitive data about existing accounts’. This then resulted in a $155million loss in November. Just the following month as well, Youbit, an exchange in South Korea filed for bankruptcy, after it was the victim of an attack in which it lost 17 percent of its assets. This same month, NiceHash reported that hackers also stole $63million in Bitcoin from its virtual wallet.
Smart contracts have fallen victim to hacking as well, with hackers stealing at least $50million from DAO, which is a venture-capital smart contract. Users did get their money back eventually, but only when an update was applied to Ethereum.
The flaws in the technology, which ultimately leave them open to attacks can be somewhat blamed on the programmers traditional mindsets. Richard Ma, a co-founder of Quantstamp said;
“When you have a bug, you release a patch…With a smart contract, you deploy it to the network, and it’s not possible to every change it again.”
He is set to change this though, and in March, an automated tool that scours smart contracts for bugs will be released on the Quantstamp network.
Internet security companies, such as McAfee have also spoken of the changes they will make. The Chief technology officer of McAfee has said;
“In many cases, our existing products can help secure the ecosystem…In general, it will be vulnerable to threats just like any other software system.”
The budget for software, services and hardware to secure blockchain activity will grow significantly as the world becomes more accustomed to cryptocurrency. It is expected to grow to $355billion from $259million last year.
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