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Crypto Wallets on exchange networks are not completely secure: all it takes is a good hacker and multiple wallets are cleared of all coins. Sometime in 2018, some bad guys made away with $543 million worth of virtual assets in a heist-like attack on popular Japanese exchange platform Coincheck. Luckily for the users, they were later reimbursed.
Unfortunately in some cases, when hacks like these happen, users cannot retrieve their digital assets from the cryptocurrency exchange platform, the prices of some tokens may be affected and the organizations behind these cryptocurrency platforms may shut down. Today, I am going to be discussing the largest crypto hacks that the world has seen, the causes of these hacks and the consequences of crypto hacks on the world economy.
2021 August saw Poly Network experience a major hack: the hacker made off with over $600 million worth of tokens. Poly Network promised the hacker a bounty of $500,000 and an opportunity to become its Chief Security Advisor. However, the Hacker has held on to more than $200 million worth of tokens and returned the rest, resulting in the reimbursement of users.
Before the famous Coincheck Hack in 2018, 2014 saw Japanese Bitcoin exchange platform Mt. Gox go bankrupt because of a $460 million hack and internal company problems. The hackers stole 740,000 bitcoin from users, leaving people waiting outside the old offices for their money after the company filed bankruptcy.
In September 2020, hackers stole more than $275 million from KuCoin using platforms like Uniswap and Kyber to move different tokens. The KuCoin CEO, Johnny Lu reported later that the suspects had been found and that KuCoin had recovered up to $204 million in crypto assets. There were initial withdrawal limits for users, but today people can deposit and withdraw freely on KuCoin.
2018 saw a second large crypto back on the Italian based exchange platform, BitGrail. The hackers made away with up to $170 million in Nano(XRB), making the BitGrail hack the second largest crypto back in the year 2018. There have been other hacks worthy of mention like the Bitfinex, Africrypt and CryptoCore/Lazarus hacks, but the above mentioned hacks are the hacks that shook the cryptocurrency world.
The main reason why crypto wallets get hacked is a poor security system: exchange platforms are particularly vulnerable to hacks because they offer a centralized web application with transaction functions and are often as insecure as websites.
Another reason why hackers like stealing crypto from crypto wallets is because cryptocurrency offers anonymity. It is easy to transfer from one wallet to the other and it can easily be exchanged for cash or used for payments without revealing the user's identity.
Sometimes, hackers hack into crypto exchange platforms with the intention of revealing bugs in the code. This is to inform the organization about the likely security breaches and offer solutions. The hacker may then be rewarded with a bounty or a job opportunity.
The Crypto Wallet Hacks have made Crypto Wallet exchanges ensure a stronger security system: decentralized web applications with two factor authentication are now the wave for exchange platform users all over the globe.
Another consequence of the Crypto Wallet hacks is that it creates distrust in cryptocurrency enthusiasts, lowering the price of the hacked coin and reducing the number of users on the exchange platforms.
The last crypto hacks have resulted in huge losses for the organization, as well as users who may not get their digital assets back. If the organization files for bankruptcy, jobs will be lost and there will be a rise in unemployment in that region.
The rise in value and increased acceptance of cryptocurrency makes it attractive to hackers: making millions of dollars in assets that are unlikely to be traced to your name and address is a good deal for any cyber criminal.
It is therefore important that crypto wallet exchange platforms set up stronger security networks to prevent hacks that will result in loss of funds, distrust from users and possible bankruptcy.
Ethical hackers are a good human resource for these exchange platforms: they can help identify bugs in the code in exchange for a specific bounty or a donation to the field of ethical hacking.
Crypto users also have a role to play in the prevention of hacks: exchange platforms can create more awareness on wallet safety tips like storing wallet phrases on paper or hardware, not screen grabbing wallet phrases, using multiple factor authentication for transactions and double-checking wallet addresses before confirming transactions.
The organizations behind these crypto exchange platforms can tighten security by ensuring that data breaches are identified early and corrected, staff are given access to confidential information according to level and that there are no bugs in the code.
If these measures are put in place, there will be fewer reports of Crypto Hacks that leave crypto wallets empty and people panicking in anxiety. Hackers are constantly trying to stay a step ahead of these platforms, so it is possible that with each security measure, there will be a countermeasure. I still think it is better to try so that these Crypto Hacks can become a thing of the past.