$1 billion worth of bitcoin and altcoins were looted by hackers in the previous year alone, according to the report by Chainalysis. The damage bitcoin losses have done up till now can be recognized from the fact that more than 1 million bitcoins have been subjected to thefts and hacks. The total number of bitcoin lost surpasses the bitcoin holdings possessed by bitcoin’s creator, Satoshi Nakamoto.
Apart from volatility, the most common criticism faced by bitcoin that has smashed its reputation substantially is the plethora of crypto exchange frequent hacks and thefts. As often witnessed, bitcoin hacks and thefts leave the affected ones in such a horrible position that after such incidents, bitcoin proponents convert to bitter opponents.
As crypto exchanges have been targeted by hackers since bitcoin, the world’s first cryptocurrency, was introduced, one can only imagine what destruction has been brought to the crypto world by these illicit activities. The shocking fact revealed about the majority of hacks taking place in 2018 was that over $1 billion worth crypto stolen from various exchanges were evil practices of only two hacking groups.
According to the report, two of the biggest hacks in the last 8 years account for most of the bitcoin stolen. The first one took place in 2014 where 650,000 bitcoins were taken from exchange Mt. Gox. In 2016, 120,000 BTC were stolen from the crypto exchange, Bitfinex. Hackers have altogether managed to bag $7.7 billion worth of bitcoins and the hacking activities are on the rise. Recently, a widely known crypto exchange, Binance, had to suffer the loss of $54 million worth bitcoin due to a hack. The exchange was lucky earlier in 2018, as although the attack was coordinated, hackers could not find any success. But unfortunately, Binance’s luck couldn’t fight bad actors from stealing 7,000 bitcoins in recently.
With time, the methods used by hackers to steal bitcoin have become advanced. Apart from making big loots from several exchanges, hackers have been smartly converting cryptos into fiat. Under normal circumstances, bitcoin and other crypto transactions taking place on a blockchain are capable to being traced. So, if the hackers try to convert cryptos using the services of the very same exchange they stole cryptocurrency from, they can be easily caught. However, there’s no way to catch hackers if they cash out stolen cryptocurrencies from another crypto exchange.
Actually, there are several other ways as well for hackers to utilize cryptos without getting caught. The dark web is one of the safest resort, where hackers can turn to exchange bitcoin and other cryptos for goods. Many merchants on the dark web accept bitcoin, much to the need of hackers. The report by Chainalysis also confirms the assertion that while hacking is the main deal, safely cashing out the stolen cryptocurrency is not a difficult task. The report mentioned that almost 50 percent of the stolen goods are comfortably cashed, within 112 days by hackers.
Crypto hacks and thefts have undermined the application of bitcoin. Hackers sooner or later found loopholes in different exchanges and make their way up to the wallets. Added to these hacks was the incident of Quadriga Cx, where due to the death of CEO, Gerald Cotten, bitcoin and other cryptocurrencies of millions of dollars of worth was lost, which further destroyed the image and potential bitcoin and cryptocurrencies. As only Cotten knew the key to access hard wallets and there was no way to retrieve the loss.
One way or another, people’s assets existing in online wallets proved to be devastating. One possible solution exchanges can opt for to hinder such fraudulent activities is to acquire cold storage, for storing bitcoin and cryptos in an offline wallet. Since internet connectivity makes hot wallets easy to crack, users can safeguard their shares by cutting the link of wallet with the online world.
Bitcoin is a digital currency that displays all the traits of decentralization, a debate has been going on since forever about bitcoin substituting fiat. However, whenever it is fiat against bitcoin, we can’t forget that billions of dollars have been laundered and stolen too, and the blame goes to lack of crypto regulations. So while we recognize the value of bitcoin that most people are unaware of, we must also realize that fiat was never any better.