Welcome, and thank you for being part of the MyZucoins community! Dive into some important crypto, finance and tech news to stay ahead.
Since the dawn of cryptocurrency in 2011, an astonishing $11 billion has been stolen in various digital heists, encompassing cryptocurrency exchanges, wallets, and mining platforms. InsideBitcoins.com reports highlight the severity of these security breaches, revealing how even leading platforms have been left bankrupt by these cyber-assaults.
The hacking spree began with Tokyo-based Mt.Gox, the dominant Bitcoin exchange controlling 70% of global Bitcoin transactions. In 2011, an internal auditor’s compromised computer allegedly led to a loss of 2000 BTC ($17.2 million). A larger-scale heist in 2014 saw the exchange lose $6.5 billion (740,000 BTC), representing 6% of all Bitcoin in existence then. The catastrophic event led to the recovery of only 200,000 BTC, while the remainder vanished, pushing Mt.Gox into bankruptcy.
The year 2012 continued to reveal the digital underworld’s appetite for cryptocurrencies. Notably, Bitcoinica, which facilitated leveraged speculation against the Bitcoin to USD exchange rate, lost $1.2 billion in three separate hacks. Similarly, BitFloor lost $208 million (24,000 BTC) when an attacker exploited an unencrypted backup of wallet keys. In total, $109.6 million was siphoned off in 2013, with notable casualties including PicoStocks and Inputs.io, which both suffered due to internal vulnerabilities and external server flaws respectively.
The peak of these digital burglaries was seen in 2014 and 2019. In 2014, a whopping $6.6 billion was stolen, with notable incidents involving MintPal, Crypto, and BitPay. Fast-forward to 2019, the notorious hacking year saw an unprecedented eight major establishments, including the largest crypto exchange Binance, lose vast amounts to hackers, totalling a loss of $104 million. In the face of this persistent and escalating threat, there’s a pressing need for reinforced collaboration between users and investors to secure digital assets and halt the decade-long torrent of cryptocurrency heists.
These figures underscore the persistent vulnerabilities within the blockchain technology, necessitating the urgent need for more robust security measures and collaborative efforts between users and investors to minimize losses in the future. Read More Here.
Which brings us on to a related topic that is worth covering too…
Instead of exchanges, in recent years some people in the industry have been looking towards bridges. Blockchain bridges are systems that link different blockchains together, allowing value exchange between them.
While they’re a good idea in concept, they’re proving to be a troubling weak link in the cryptocurrency industry. In just over a year (2022 data), more than $1 billion has been siphoned off from bridges like Ronin, Wormhole, and Poly due to sophisticated hacking attacks.
These bridges handle an enormous volume of complex transactions and hold vast amounts of currency, making them juicy targets for hackers. Imagine a physical bridge between two islands with differing vehicle regulations. You park your car on one side, walk across the bridge, and pick up a rental on the other side. The parking garage brimming with idle vehicles is akin to a blockchain bridge: a repository of value that’s not entirely secure. The complexities of managing interactions between different cryptocurrencies increase exponentially, leading to more potential exploitable glitches in the system.
Despite these drawbacks, blockchain bridges aren’t necessarily making the crypto-landscape less secure. In fact, they are targeted because the rest of the system is largely secure.
Bridging the gap between security and functionality won’t be easy. The often repeated solution is “code auditing”, but the fast-paced and competitive nature of the industry often sidelines diligent security work in favor of growth and innovation. Navigating this dilemma requires a delicate balancing act, ensuring a more secure future without stifling the forward drive that characterizes the crypto-sphere.
The Importance of Managing Your Own Wallet and Doing Backups
In the world of digital currencies, safeguarding your cryptocurrency assets is of utmost importance. With the rise of cryptocurrencies like Bitcoin and Ethereum, leaky exchanges and bridges, individuals have the opportunity to maintain control over their digital assets stored in their wallet. However, this also means taking responsibility for the security of your digital assets.
One crucial aspect of cryptocurrency security is backing up and securing your wallet, particularly the public and private keys that are unique and inseparable.
The Significance of Wallet Backups
Losing access to your cryptocurrency wallet or its private keys can permanently lose your digital assets. Without proper backups, you cannot recover your assets in case of loss, damage, or theft.
There is no central repository where your private wallet data is held. It’s only stored locally on your device.
Therefore, creating backups of your wallet and storing them securely is essential. This ensures that even if your device is lost, damaged, or compromised, you can still regain access to your funds.
Public and Private Keys In Your Wallet: Unique and Inseparable
Cryptocurrency wallets rely on a pair of cryptographic keys: The public key and the private key. The public key is used to receive assets (such as coins) and it forms your “wallet address”.
Meanwhile the private key is used to prove ownership to those assets, allowing you to transfer them. These keys are mathematically linked and are generated together as a pair. If you lose your private key, you lose access to your funds forever.
Backing up and securing your cryptocurrency wallet is crucial for protecting your digital assets. By understanding the significance of public and private keys and implementing best practices for backup and security, you can safeguard your funds and have peace of mind in the ever-evolving world of cryptocurrencies.
Note: Backing up your wallet for long-term storage depends on your technical know-how and individual circumstances. We recommend contacting your local IT providers for advice and of course, doing your own research.
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All the best,
Rob & Peter