Cryptocurrencies, which were once a close associate to hacker and underground network, have gone quite popular since the past two years. In 2017 they valued sky-rocketed to an impressive $20,000 but however declined the next year.
But apart from the ups and downs faced in the market, the world’s most notorious cryptocurrencies are in much more severe danger.
In 2018, it was reported that an estimated $1.7 billion worth of cryptocurrencies were duped away from the investors either through hacking, phishing or any other form of scam. No matter what is the face of the fraud though, the fact that these currencies face security crises is itself a dilemma to ponder upon.
These currencies are known to be a technological advancement that focuses on the sole advantage that it the security it offers, it facing data breaches is indeed an alarming situation.
Cryptocurrencies offer the users an innovative way to send money without the interference of a third party. However, the fact that the industry is facing security issues then the centralized firms is a severe blow to its reputation.
On the other hand, the traditional method of money transfers that is the banks have far fewer issues with hackers as compared to the crypto industry is indeed a dilemma.
Crypto exchange service a vulnerability?
Although cryptocurrencies have a reputation of being decentralized, they have many aspects that aren’t that way. This is the one main flaw in the 2018 cryptocurrency exchanges.
Although the background technology behind bitcoins, ether, and litecoins, the cryptocurrency exchange may be centralized in nature their regulation differs from most of the financial firms.
As highlighted in a data collected by CipherTrace’s 2018 cryptocurrency report, $950 million out of the total $1.7 billion were stolen from the exchanges and infrastructure services. These exchange services, due to the ease they offer the best way to start p with cryptocurrencies as some also handle fiat currencies.
However, one drawback to the ease is that it makes these currencies a significant target for hackers and phishers. With 2028 undoubtedly marked as a year for cryptocurrency hacks, 2019 doesn’t seem very far behind so either.
This South Korean cryptocurrency exchange gave an announcement regarding the security breach and the theft of $19 million worth of cryptocurrencies it faced. This is by far the most significant breach experienced.
According to the exchange, the attack might be an inside job done to steal EOS and XRP. However, the most important fact is that this is not the first hack. In 2017 hackers manage to take $31 million worth of cryptocurrencies and about $ 1 million in the previous year.
The Singaporean based exchange DragonEx suffered a hack in March. As they announced publicly, they lost a total of around $7 million worth of cryptocurrencies. They were either stolen or transferred to other exchanges.
DragonEx has denied any rumor of facing potential bankruptcy and as promised to work on a preliminary compensation plan for the clients who had suffered loses.
The exchange has also released the names of the susceptible wallets that might have the stolen funds and has requested for the cooperation of other exchanges and wallet providers.
As the amount of cryptocurrencies being stolen is rapidly increasing, security experts and analysts are working up to find ways to get hold of the situation.
Nevertheless, CipherTrace’s report played a role in changing the landscape of crypto hackers and scams. The hacks that occurred through the direct exchange in 2018 are starting to gradually improve.
By 2019, the experts hope that methods like social engineering and application of the insiders may become the most significant threat.
For the scammers and phishers, the cryptocurrency space seems like a ripe plum which is why newcomers are flocking the scene.
With seemingly illegal social media accounts claiming to influential people and the fake “exchange support member” accounts promising to help with logging in issues, there is a definite shift in the industry’s outlook to security breaches.