The cryptocurrency project, IOTA, is at the receiving end of widespread anger and criticism from investors and the public alike as they recently suffered $4 million in losses following a hack.
The IOTA network has been receiving criticism from experts, investors, and the general crypto community after a recent hack stole over $4 million worth of users’ funds. Critics maintain that the project’s technology is the culprit behind the hack, as it allows for exit scams. IOTA is the network that powers the altcoin, MIOTA, which is currently the world’s 11th most powerful cryptocurrency in the world, in terms of market cap.
To add fuel to the fire, this is not the first criticism to be leveled at IOTA: in December 2017, IOTA received more criticism when critics accused them of hyping up an alleged partnership with the tech giant, Microsoft.
How the hack worked
The wallet created by IOTA requires users to create their own private keys. To do this, several users utilized online services which automatically generate private keys. The website, iotaseed.io, is particularly popular among users.
This system, however, makes the independently generated keys vulnerable to being exposed and subsequently exploited. For example, if an online key-generating website is compromised, or fraudulent to begin with, the generated user keys can be stored and then used to hack into the relevant IOTA wallets.
Over the past weekend, several users noticed that their funds were moved out of their wallets using previously stolen private keys. While this was taking place, the same hacker, or group of hackers, orchestrated a DDoS attack against several prominent IOTA nodes, which ensured that affected users were unable to recover their stolen funds.
Advocates for IOTA maintain that the issue didn’t lie in the technology. However, critics believe that the system was at fault, blaming the requirement for third-party private key generators and calling it a recipe for a disaster that was bound to be exploited at some point.
