You must be feeling pretty secure and happy with your Bitcoin investments, as even if you don’t get a profit atleast its secure. Well for those of you’ll make a profit, then it’s one up with extra capital to keep buying Bitcoin to raising your Bitcoin game or for paying your bills.
What if one day, you see your Bitcoin wallet and there’s not a single Bitcoin left? You try calling the customer care number of the Bitcoin wallet you use but to no response. You then email asking where your Bitcoins have disappeared and how you can retrieve it back. No luck with the email either.
You then get busy with life and you awaken everyday hoping that the amount of Bitcoin will miraculously pop back in your Bitcoin Wallet. Then after a few days, you get a mail stating that a transaction happened, and you know very well that there was no transfer that happened that day.
Simple, you just got Bitcoin Hacked!
Without this scenario taking place, it is important to understand the basic hacks and theft behind Bitcoin and previous cases which will help you take precaution.
As they say, precaution is better than cure!
Satoshi Nakamoto made Bitcoin under the notion of a special private key. This special private key will be known only to you if you use your own Bitcoin hardware wallet, but if you use a Wallet such as Coinbase the private key will have to be shared with this third-party application. Behind the maths of Bitcoin, it is impossible to guess or find out the private key. Unless, you are tricked into giving the Bitcoin private key to someone, or the third party who controls your private key is compromised or hacked.
Keep your private key hidden to the world, by storing it on a piece of paper or a USB Stick and keeping it in a physical safety deposit box.
The frauds already existing, of impersonation of a supplier or service provider has been replicated into the cryptocurrency world. With initial coin offerings (ICO) starting to become popular last year, many hackers took advantage of posting fake ICO’s with very promising returns. The result was millions of dollars in cryptocurrency being transferred to individuals who were sitting by the beachside sipping on some beers smiling at your ignorance.
Always confirm whether the Wallet Address, the ICO, or the Person you are about to send Bitcoins to is genuine and of the right intentions. Sometimes trusting your gut instinct may not be enough, use the magic search engine called Google and dig into reviews. If someone is fake you will notice the countless bad reviews in bold ‘SCAM!’
There is a company offering Bitcoin related services. Either a wallet, Bitcoin business, ICO or the countless other Bitcoin related activities. It looks genuine enough, and so you invest half of your savings into this service which shows a progressive improvement in your finances. After you invest, you notice that the company’s website is down. Its down for a whole month, and then you realize that the company does not exist anymore.
This is called an Enter-Steal-Exit Scam!
Beware of such sites; keep an eye out on detail, a too good an offer is never true. It’s better to keep it simple and play safe with the more realistic offers.
Biggest BTC Hacks
One of the most successful animations of all time The Lion King teaches us;
Oh yes, the past can hurt. But, you can either run from it or, learn from it.
So, the biggest BTC hacks need to be learned from as if you want to make some big bucks in the Bitcoin game. If you run from it due to the fear of BTC hacks, there’s not much to be gained other than lost opportunity.
So here are some of the most popular BTC hacks till date – Hopefully the ONLY BTC hacks to date.
1. Mt. Gox
This happened right after Bitcoin was released into the world, when people started exploring the new technology. It happened in 19 June 2011, with a hack of 2609 BTC in the first round of hacking. A hacker got hold of the auditor of Mt. Gox’s credentials and transferred the BTC to an address of no access. This would have ensured that customers will leave to other prospective exchanges however they still remained loyal.
The second attack was worse, in 2014 when Mt. Gox was operating at a capacity of 70% of BTC transactions. A total of a whopping 750,000 BTC was hacked this time, and there was no turning back for Mt. Gox, No refunds and this affected lots of users.
This took the whole Bitcoin confidence to a drastic new low, which took a few years to regain from.
This shows that backups can be a threat too. In 2012, hackers got hold of unencrypted private keys that were kept online for backups. A total loss of 24,000 BTC, which was eventually refunded to its users.
A painful end to the founder of BitFloor Roman Shtylman and the exchange which would have been a success in recent times, such is the issues with hacking.
Yes, a very popular Bitcoin exchange called Poloniex learnt its hacking lesson. It was hacked on 4th March 2014 with almost 12.3% of the owners being completely wiped away in BTCs which were about 97 BTC at that time. The hackers took advantage of a withdrawal code which had a major issue. Talk about dangerous promotions!
Poloniex played their cards right by reducing 12.3% of every user’s funds, so that they would not withdraw the funds due to fear. This helped sustain the users who were hacked, and helped prevent a major fallout of Poloniex.
Unofficial reports claim a hack was carried out in 2017, however this was a rumor.
Bitstamp learned from its mistake. A few years ago, 4th January 2015 an anonymous hacker stole 19,000 BTC which was at that time about $5 million. This was a huge hack, and could have collapsed Bitstamp in a minute. However, Bitstamp fought its way through this issue and learned that the future was what was needed to be solved.
Security measures such as BitGo multisig wallets ensure now that hackers don’t fancy trying to steal from Bitstamp.
Bitfinex faced the second largest Bitcoin hack in August 2016, of 120,000 BTC which were worth roughly $72 million. The attackers were too smart, and found a small vulnerability in the multisig wallet architecture of Bitfinex and Bitgo which they did their best to attack.
You must be wondering if you should remove your BTC from Bitfinex, since it’s a very popular exchange most of you readers most probably have BTC on it. Worry not their BFX tokens helped them the last time around by being given back to hacked users, and if you get hacked this time (God Forbid!) you are sure to gain back BFX. It’s a pretty sweet deal.
Even though the hack took place, it has the best volumes in terms of BTC/USD.
NiceHash is a Slovenian Bitcoin service website where users can buy hashing power. This means users are able to be part of the mining process and earn while their investments work on the hashing power needed for successful Bitcoin mining. Its been a plus point for both Bitcoin miners and beginners who want to take advantage of Bitcoin mining.
On December 6th 2017, an undisclosed figure was stolen by hackers from NiceHash. Reports stated as much as 4,736.42 BTC was stolen which was worth more than $62 million. This was a hack on a service, which not many would think could be hacked.
The breach left the users, suspecting an internal job. This could have been the case; however, the evidence is still to be seen. The NiceHash team urged users to change their passwords on all sites as passwords were infiltrated and could be misused.
Bitcoin thefts are not reversible, which means that if a Bitcoin is stolen the new owner has full control over them. There is one issue though, these stolen coins become reported and then sit idle on the blockchain which makes it a waste of a Bitcoin as it cannot be used.
I would bang my head on the wall if I was to ever get hacked off my BTC after reading this guide. The above ways of the different modes of hacking along with past events will ensure you play the Bitcoin game right.
On the whole, in the last decade, almost $US 1.2 Billion worth of Bitcoin and Ether have been stolen according to according to Lex Sokolin, global director of fintech strategy at Autonomous Research. This has given rise to more suspicion when users start trading in Bitcoin or other cryptocurrencies along with companies forming cybersecurity solutions for cryptocurrencies.
Blockchain technology as a whole has become a favourite amongst hackers as the benefits and rewards are far more superior compared to hacking a retailer and sometimes even hacking a bank.