Digital currencies are far more susceptible to theft than fiat money. That’s according to one cybersecurity billionaire.
Orion Hindawi, founder of California-based security firm Tanium, believes that stealing money from a person’s personal wallet is a lot harder than gaining access to an individual’s computer and stealing their digital wallet, reports The Times.
“The North Koreans are making lots of money hacking machines and stealing cryptocurrency,” he said.
Looking back through the history of the cryptocurrency market it’s clear to see that there have been a number of cyberattacks on various digital currency exchanges. Does this, though, make them anymore susceptible to theft than the fiat monetary system?
The most famous of was the Mt Gox hack in 2014, which resulted in $450 million worth of bitcoin being stolen from the now-defunct exchange. In January, 2015, bitcoin exchange Bitstamp suspended trading after a security breach resulted in the loss of 19,000 bitcoins. At the time, this was worth around $5 million. The DAO – a Decentralised Autonomous Organisation – was subjected to a security breach in 2016 after a hacker was able to exploit a vulnerability, enabling it to steal $50 million worth of ether. In July of the same year, Steemit found itself targeted by a cyberattack with around 260 accounts compromised and $85,000 worth of Steem Dollars and Steem having been stolen. A month later, bitcoin exchange Bitfinex was hacked in a security breach, which drained nearly 120,000 bitcoins from its customer accounts. The hackers were able to exploit a vulnerability with Bitfinex’s multisignature wallets used to store their customer funds.
Fast-forward to July 2017 and Israeli startup CoinDash found its ICO crowdsale subjected to a hack, resulting in $7 million of ether being stolen. Unbeknownst to investors a fake ethereum address had been placed on the ICO website where investors were sending their money expecting to receive CoinDash tokens in return. July was also a month which saw a vulnerability being exploited in the Parity Multisig wallet, draining around 150,000 ether or $30 million. Just recently, Parity revealed that all of its multi-signature ethereum wallets created since the 20th July were ‘accidentally’ frozen, permanently locking users out of their wallets. One new report, however, suggests that it was no blunder, but in fact ‘deliberate and fraudulent.’ July also saw the hack of Veritaseum’s ether wallet, which saw the loss of $8.4 million in ether, around 36,000 VERI tokens at the time. In August, Enigma, which was started by a group of MIT graduates, was subjected by a hacker who targeted its ICO after managing to infiltrate its website, Slack group and email list, enabling it to send fraudulent messages to the project’s community asking for money. This was despite the fact that the organisers behind Enigma had previously said that they would never contact people asking for money in this way. Yet, through this method the hacker was able to collect around 1,500 ether, worth $500,000 at the time.
Earlier this month it was reported that Electroneum, a new U.K. cryptocurrency, had been targeted by a cyberattack, which shut 150,000 investors out of their accounts for several days. During its crowdsale it was able to raise $40 million in bitcoin and ether; however, it’s reported that no money was stolen.
Despite the fact that the cryptocurrency market has attracted a number of bad actors over the years it’s still continuing to flourish. According to CoinMarketCap, the combined market value is currently worth $207.6 billion, and is steadily rising. Not only that, but even though Jamie Dimon, JPMorgan Chase CEO, has called bitcoin ‘a fraud’ in the past he believes it has the potential to reach $100,000. Whereas, Tim Draper, a venture capital investor, is of the opinion that in five years fiat currencies will no longer be used as cryptocurrencies will have replaced them.
So while Hindawi may make the claim that digital currencies are easier to steal than fiat money it’s unlikely to impact the trading of investors. Just as fiat money can be stolen from banks or by pickpocketing, so too will cryptocurrencies continue to be targeted, and that’s something that’s unlikely to stop anytime soon.