🤖 The Need for a Secure Cyberspace in the Cryptocurrency Era (Series: Part 2) 😭

Let’s look further into the past and discuss the lessons learned in cryptocurrencies.

Bitfinex was hacked in August of 2016 causing the price to fall. The Bitfinex data hack was responsible for the loss of 65 million dollars worth of Bitcoin. As a result, the price of bitcoin fell by as much as 20% to $400 down from a high of $613 that week. Prices climbed back to $550 as of that Wednesday. The said hack is one of the largest steps in bitcoin’s long troubled history. In 2014 investor confidence and bitcoin was dented by a large security breach at Japanese exchange Mt. Gox, which collapsed after hackers stole about 850,000 Bitcoins, at the time, worth $415M About 200,000 Bitcoins were later recovered.

The Mt. Gox exchange hack is the most notorious Bitcoin hack of all time and was the first cryptocurrency hack to gather attention from the mainstream media. Japan-based Bitcoin exchange Mt. Gox had been operating since 2010 for just over a year at the time of the hack and was the biggest Bitcoin exchange in the world at the time.

Hacking and theft are the two biggest issues that may prevent the digital currency from gaining more widespread use. In 2017, CoinDash Suffered a Hacking Attack and $7 million worth Ethereum was stolen. Cryptocurrency hacked and lost amount to an estimated 60 million dollars worth of currency. Securing bitcoin platforms has been difficult. Bitfinex confirmed that over 119,000 Bitcoins were stolen. The exchange halted trading as well as deposits and withdrawals. The company worked with law enforcement and analytics companies to try to track down the stolen coins and get the platform back online. Bitfinex, founded in 2013, was then the fifth largest bitcoin exchange and the largest outside of mainland China.

Cryptocurrency, if not held securely, is extremely easy to abscond with. Cryptocurrency is stored in wallets, which are controlled by a “private key” that should be known only to the owner of the currency. There are many different types of wallets, the most secure of which is “cold wallet”, which is stored offline without an internet connection. Source
Many exchanges host all of the customers’ needs including holding their private keys. As a result, these “hosted wallets” became easy targets for hackers as well. That’s why the resulting losses were enormous. - Millions of dollars worth of Bitcoin was stolen in various attacks since bitcoin became popular. Trying to retrieve even a fraction of the lost coins requires expert programmers with analytical skills and is very costly, let alone bringing the thieves to justice.

According to Autonomous Research, all throughout the history of cryptocurrencies, hackers have taken away bitcoins and Ethereum worth about $1.2 billion or about 14% of all stocks existing today. Lex Sokolin, Autonomous Researches director for financial strategy noted that cryptocurrency theft "turned into an industry with a profit of about $200 million per year."
In other news, WinterGreen Research reports that hacker attacks on cryptocurrencies caused losses to private institutions and governments in the amount of $ 11.3 billion worth of lost taxes and profits from legal transactions. Meanwhile, in the quest to block new attempts by hackers, the market for security software, services, and hardware solutions to protect Blockchains may grow from $259 million in 2017 to $355 billion in the years to come.

We are in this era of astonishingly advanced communication technologies and transportation networks but our money system lags a little bit behind. We have a lot of pain points where there are maybe inefficiencies and excessive strangulating fees. For example, we can now talk live to somebody in Mongolia over video chat but if you want to send them 20 dollars, it might take a week using traditional methods. Though we hardly ever send physical money across the ocean nowadays, bank transfers still take a while due to a lot of regulations. That’s another reason for having to pay hefty fees. Remittance companies might take up 25% of that a huge portion of our economic activity. Credit card companies and wire transfers are still being used in the present because they're the best way that we can connect our assets to this big thing we call the internet.

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More Advantages

An online system of sending and receiving money like cryptocurrencies could help distribute donations for free so it will reach the disaster zone faster. It could prevent currency manipulation by corrupt governments as well in theory. It could have all kinds of positive effects including maybe make it easier to buy a coke with your phone. The problem with this idea, of course, is that as soon as the ledgers were put on the internet, they would be instantly targeted by a legion of hackers. We have already seen DDOS attacks, phishing, spyware, etc., all targeted directly at peoples’ precious bank accounts. Without any sort of protection, within days, if not weeks, the entire money supply of the world would be divided into all the hackers and their groups/supporters.

The same technology that was able to spread very quickly around the world is actually not a terribly secure technology and certainly not a very reliable one in this respect. - These are the obvious reasons why we need improved security in the cryptocurrency era.

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