A cryptocurrency is a decentralized ledger that runs on a blockchain. A crypto like bitcoin or Ethereum is a decentralized currency which means that it is not issued by any federal agency. The transactions in the blockchain are considered safe because each transaction is verified on a peer-to-peer network.
However, cryptos are not entirely protected from hackers. There are many ways in which crypto can be hacked, and such hacks have caused massive losses to crypto exchanges and investors. Nonetheless, cryptos are a worthy investment, and if you want to trade in them, you can visit bitcoin hack.
How Can Cryptos Be Hacked
There are several ways in which crypto can be hacked. The biggest source of vulnerability is a crypto wallet. A crypto wallet helps store the information that is necessary for operating a particular crypto account.
Most wallets encrypt the data about a person’s password. The wallets also give the users a public key and a private key. The public key is used for all public transactions, and the private key always remains safe. However, many hackers have cracked the encoding used in the crypto wallets to decode the password of the private key.
Apart from wallets, crypto exchanges have been compromised as well. In these cases, hackers have used malicious software to breach the security system of the entire exchange.
The Most Vulnerable Cryptocurrencies In The World
The Binance Hack
Binance is not a currency, but it is an exchange that trades in currencies. It is headquartered in a Caribbean nation, and it operates one of the largest exchanges in the world. In 2019, this exchange was hacked of nearly seven thousand bitcoins, and at that time, it resulted in a loss of nearly forty million dollars. There are several reasons why the hacker targeted this particular exchange. Binance is one of the largest exchanges in the world, and it trades in more than three hundred different currencies.
Moreover, the hacker chose to steal bitcoins because it is the most precious crypto. Thus, while bitcoin in itself is quite safe, and the main blockchain has never been hacked, hackers have earned bitcoins by attacking trade exchanges.
A bitcoin is protected because each transaction is verified by peers on the network. And the only way to hack bitcoins is to control the computers that users use to solve the mathematical questions that generate a new block in the blockchain network. If a hacker can control most of the computing power used to mine bitcoins, then the blockchain underlying bitcoin may be hacked. However, this is quite difficult to achieve, and hence hackers try to steal valuable currencies like bitcoins from vulnerable exchanges that trade in them.
In the 2019 attack, Binance suffered a major loss because the hackers were able to send malicious software that could decode most of the private key codes. A private key password is used to operate a crypto account. At times an investor might store the private key in an exchange, and if the private key gets hacked, then the investor might lose all his coins.
The exchange tried hard to trace the hackers. It took help from US federal agencies. And according to the clues, the hacker was traced to a single account.
The exchange again faced a brutal attack after three years, losing almost five hundred million dollars. Again, this time bitcoins were the prized possession that was hacked. In the latest attack, the hackers used the vulnerabilities of a cross-chain-like system to target the exchange.
A cross-chain is like a bridge between two or more cryptos. Most cryptos are independent of each other, so a person who is mining bitcoins cannot directly shift those bitcoins to Ethereum. But the cross-chain system allows such transactions. Thus such bridges are highly useful in the digital world because any person can transact or exchange any digital asset for another without the need for any intermediary.
However, such transactions are vulnerable. And the hackers targeted one such system in the Binance exchange to rob the exchange of several coins. The exchange tried its level best to reduce the losses to its invested. It immediately stopped all transactions.
In this case, the law enforcement agencies hinted that the hackers have used multiple accounts in the Binance exchange, but it is still uncertain if the attack was carried out by a single person or a group of persons.
The Bitfinance Hack Of 2016
The Bitfinance hack is another major attack that targeted an exchange that was located in Hong Kong. This exchange has been functional since the year 2012, and it faced a severe hack within four years of its foundation. The estimated loss was around sixty million dollars.
In this case, the hackers stole the keys of other investors and kept sharing the stolen coins amongst themselves. The exchange took help from the US federal agencies and narrowed down the culprits to an Israeli group. The group intended to steal bitcoins from the exchange. The hackers wanted to reap windfall gains because bitcoin’s value had risen significantly, and the hackers wanted to make gains by selling off the stolen coins.
The exchange tried to compensate for the investor’s losses by offering them equity shares. And the total loss suffered was borne equally by all the investors in the exchange.
Cryptocurrencies are always prone to attack because they are precious. Though most blockchains are secure, hackers are always on the lookout to target any vulnerability they can spot. As the value of cryptos increases, hackers will develop more innovative techniques to steal these valuable coins. So the wallet owners, the blockchain network, and the crypto exchanges must be very careful in their transactions.
Bitcoin has been the biggest target of hackers as it is the most valuable cryptographic asset. Most hackers want to make the maximum profit in the least time, so currencies whose values are appreciating quickly are the most common targets. Although bitcoin is highly secure, the coins have faced severe threats, and many of them have been stolen repeatedly.