Another story of hacking cryptocurrency happened in Tokyo last January of this year. Hackers were able to take nearly $500 million digital tokens. It is considered to be one of the biggest crime in the history of cyrptocurrency. The incident has raised many speculations regarding the stability of cryptocurrency in the world.
Method of hacking
The trading platform didn’t disclosed how their system was breached beyond saying that it wasn’t an inside job. The customer’s assets was kept in a hot wallet, which is connected to the external networks. Exchanges generally try to keep a majority of customers deposit in cold wallets, which are disconnected to the outside network, thus are less vulnerable. The platform also lacked multi-signature security,that requires multiple sign-offs before funds can be moved.
Place for stolen coins
It is very easy for the authorities to locate where the stolen coins are brought up, since all transactions are public. The trading platform has identified 11 IP addresses where the $500 million stolen coins ended up. It is viewable to everyone. The problem is,no one knows who is the owner of the accounts. Authorities just created a tool that would not allow exchanges for these stolen coins.
Authorities could change the blockchain by rolling back the record to a point before the incident. They would create a two versions, one that has never been hacked and another containing the stolen funds. While this approach worked for other cryptocurrency in 2015, this might not also work for bitcoins.
Vulnerabilities of cryptocurrency
Since cryptocurrency is a digital currency and assets are soaring high, there are a lot of bad guys trying to hack the system. There is a long history of thefts at cryptocurrency exchanges and wallets. It is also believed that North Korean leader has allegedly sent his hackers to swipe digital coins. It is estimated that 14 percent of Bitcoin and Ether has been stolen.
Securing your investments
Cryptocurrency investors are prime target for thieves and there is no safe place to keep the coins. One alternative is to place the investment in a software wallets,which come in online, mobile and desktop varieties. For the extra cautious, there is always the analog option, which printing out the private keys for your coins on paper.
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