Cryptocurrency Hack- Everything You Need to Know

Hackers have stolen more than 50 billion yen from Tokyo-based cryptocurrency exchange, this event generates questions about security and regulatory protection in this biggest digital market.

The following are some questions and answers about biggest cryptocurrency heists.

 

What is NEM?

 

NAM is cryptocurrency launched in March 2015 by a team of five developers. NEM stands for New Economy Movement and, like other cryptocurrencies markets itself as a digital coin outside the control of central banks and governments, which can be used for fast global transactions.

NEM is tenth largest cryptocurrency, with $9 billion worth of NEMs in trading at just below $1 per coin. Some of the cryptocurrency community believe that NEM is the key weakness of bitcoin, the world’s most popular cryptocurrency.

For bitcoin transaction, the computer computes to find the solution to complicated problems, which NEM developers say makes the rich richer as those who have money to afford hardware for solving these problems.

 

How Was Coincheck Hacked?

 

Many details are still unclear, but Coinchief operating officer said, when $523 million NEM coins were sent form a NEM address at Coincheck, eight hours later, Coincheck notice an abnormal decrease in the balance.

Coincheck said the NEM coins were stolen from “hot wallet” instead of a “cold wallet.”

 

What is Hot Wallet?

 

Hot wallets are connected to the internet, therefore vulnerable to hacking. Experts warn that holding a large amount of currency in hot wallets is the equivalent of carrying large amounts of cash in person.

Trezor, Ledger and Nano S are cold wallets, these devices can be as small as USB stick and can be stored offline.

 

The Bitfinex Hack

 

This is Hong Kong based cryptocurrency exchange platform owned by iFinex Inc. This company also provide trading and wallet service for the cryptocurrency. Bitfinex biggest hack was in 2016 when almost 120,000 BTC were stolen from the platform. This amounted to $72 million and it is the second largest Bitcoin hack.

Details of the Hack

On August 4, 2016, programmers exploited a defect in the multisig security convention of the Bitfinex steal 119,756 BTC esteemed at $72 million from the few customer accounts. In an offer to improve safety efforts around their task, Bitfinex chose to utilize multisig (numerous mark) security protocols. This made 3 private keys for a wallet split between three owners. Access to a wallet required 2 out of the 3 keys. Bitfinex went into an association with BitGo and 1 private key for each client wallet was put on BitGo servers.

Some details of the hack are yet unknown however the overall theory is that the Bitfinex multisig security structure wasn’t multisig. So, when hackers breached the servers of Bitfinex, they were able to get around the BitGo security protocols.

The purpose of this article is to educate readers about the crypto-attacks, as any system there are flaws. But this shows that no matter what happens, this amazing world of cryptocurrency will always come back stronger.

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