Crypto Hack – Cryptocurrency Theft
To some, it might seem that cryptocurrency is very hard to secure. The reality is that stored correctly, cryptocurrency represents a safer way to secure an asset than many alternatives. In this article, we will look at what has just happened to the Cryptopia exchange in New Zealand, exchanges in general, and the overall picture of cryptocurrency storage and security.
At present, there are several hundred cryptocurrency exchanges with some estimates putting the figure at 600. Due to hacks to date, we have seen $1.3bn of investor’s funds lost. Mt Gox remains the most well-known hack, with the massive $500 million worth of NEM coins from Coincheck being the largest to date. That happened in January 2018.
Not all Cryptocurrency Security is Created Equally
Hardforking is a Bitcoin site and as such our knowledge of each crypto project and the level of security available in each project is not precise. What we can say is that not all projects are created equal, far from it. Bitcoin wallets are the most advanced and do offer better security than the multitude of other crypto coins and their wallets. The simple fact that Bitcoin is the biggest project in crypto has meant the most development and range of choice available when choosing a wallet is better than these other projects.
Crypto Exchange Hacks
Jesse Powell, the CEO of a major crypto exchange Kraken, warned users of digital assets to not store funds on trading platforms. He is not alone in this statement but it speaks volumes when an exchange CEO is saying this.
Cryptopia, an exchange based in New Zealand, is the latest in a long line of crypto hacks. It looks like $3.5 Million has been nabbed in this latest crypto heist. Bad publicity for the industry as a whole, awful for the people running the exchange and devastating for the innocent people who have lost their funds.
The whole industry is in its infancy. Knowledge of the space with regards to what Bitcoin and crypto is, how to buy it and how to store it is still very basic and the domain of the tech-savvy. This will change and the user experience will get a lot better, hopefully later this year. A real problem exists with people getting their heads around how to buy Bitcoin or cryptocurrencies and then in the main not moving on to the next step of actually taking possession of their asset in their own wallet. Learning how to do this is not as difficult as people think but the reality is the vast majority have their funds on an exchange and leave it there.
The industry is quickly moving to custodial solutions. Industry leaders like Casa https://keys.casa/ offer a custodial solution but at a price of 10 000 Usd per year. This is clearly for holders of significant amounts of BTC or cryptocurrency. Glacier protocol offers a very good guide on how to store your own keys. Big institutions are also gearing up to be able to offer this. The likes of Fidelity and Bakkt will over time alter the landscape once the regulatory framework is fully in place. For many people who just don’t want to take the personal responsibility for securing their own asset, these companies will offer a solution superior to leaving assets on the current exchanges. The reality though is that the correct use of your own wallet is the best way to secure your Bitcoin or Crypto asset. Hardware wallets and cold storage are the best solutions. Cold storage can be just remembering your private key. Simple as that.
Tracking Down Crypto Thieves
It will seem strange to most people that it is actually very easy to see where stolen funds have gone. Blockchains allow this, they are public ledgers of all transactions. CZ, the owner of Binance, one of the biggest exchanges, has frozen funds that were moved to his exchange from the ill-fated Cryptopia exchange. What this actually means from a legal standpoint is still very grey. Can these funds be held and by who? What will happen with these funds ultimately? It will be very interesting to see how this plays out. Many crypto thieves have been caught. The reality is that people can be tracked down. This is not easy to do but it can be done. This in part has lead to the industry which was attacked in the mainstream press as being a playground for illegal activity to be viewed in a different light. Using Bitcoin for large scale criminal activity is not a smart move and everyone has grown up to this fact. You don’t see the constant attack from haters of the industry on this anymore as it simply is not the case. Cash is the king and the clear choice of criminals. This fact aside criminals are attacking and stealing crypto. That, the crime space needs to get on top of!
Crypto Hack – Summary
If you are going to buy Bitcoin then use your own wallet. If you’re trading then just keep the funds you’re actually trading with on an exchange. Moving funds from exchanges to your own wallet is much easier than you might think. Once you have done it a few times, you will wonder what the fuss was all about.
If you are trading with all your Bitcoin or Crypto stack then use one of the better exchanges. Just like cryptocurrencies, all exchanges are not created equally. There are many exchanges with questionable practices out there so choose wisely. News has also just come in today, that KYC or personal data from big exchanges are available on the dark web. If true this represents another significant hack. We are looking into this now and will follow up, once more facts are present. Remember it’s not if the exchange you are using is getting hacked, it’s when it will get hacked.