While the number of Crypto-currencies users is growing, new flaws appear. Some are illegal ways of obtaining Bitcoins. Just like the American gold rush, where untraceable money is available – the hackers will follow.
I would like to touch the topic of cyber-security or to be more specific – raise awareness of Bitcoin Robbery.
Numbers don’t lie
As Bitcoin, Ethereum and other crypto-currencies popularity are on the rise by a daily basis, they invite not only investors or individuals looking for a new payment format but hackers known as crypto-thieves as well.
Over the last two years, hundreds of millions of dollars have been digitally stolen. Here are some numbers to consider:
- Gox-a Bitcoin exchange based in Shibuya, Tokyo operated since July 2010 until 2014.
By 2013 and into 2014 the exchange was handling over 70% of all Bitcoin transactions worldwide. As the largest Bitcoin intermediary and the world’s leading Bitcoin exchange In 2014, hackers stole nearly $500 million in Bitcoins which caused their collapse and later Bankruptcy.
- This continued in 2016 when Bitfinex were robbed off $72 million from the Hong Kong crypto-exchange by hackers & thieves.
- According to their files, Coinbase, the largest Exchange in the world for crypto-currencies are estimating up to $5 million annual losses to theft by hacking.
How did this happen? Isn’t Blockchain (supposed to be) safer than the options we’re used to? Well, it seems that it’s easier than thought before. Below you can find the systematic methods applied by these crypto-thieves.
The strategy of the Crypto-thieves
- Step 1: Find your target.Scammers are looking and targeting people who work in the blockchain industry — or by exploring all over social media for mentions of Bitcoin and Coinbase. Through online postings or previous data leaks, the attacker then finds the target’s email address and phone number.
- Step 2: steal the phone number.The crypto-thief contacts the victim’s mobile provider and ports the phone number to a device in his possession. This is by far one of the easiest parts, as it sadly turns out.
- Step 3: adjust the account.Since Gmail accounts often link phone numbers as a backup access option, the digital thief can now log in and reset the target’s email password, then do the same at Coinbase.
- Step 4: log in.Coinbase requires two-factor authentication (also known as 2FA) in addition to a password. That 2FA now gets texted to the thief, who logs in.
- Step 5: transfer the money. The crypto-thiefmoves the money into digital wallets under his control. Law enforcement can easily track the movements of the stolen currency recorded on the blockchain, but they, however, cannot block the transactions and figuring out who controls the stolen wallets is really problematic.
- Step 6: cover the tracks.To try to cover his trail, the crypto-thief can move the currency to foreign crypto-exchanges, or convert it to other kinds of digital currencies that are harder to track. Eventually, he can convert it to cash or other assets. Simple as that.
In conclusion, we understand that blockchain and cryptocurrencies have a huge potential to transform nearly every aspect of our lives. Yet, from the review & steps provided above, it is clear that some threats have to be addressed very carefully as well. And one of them is the crypto-thieves.
Read more at FXPMarkets:
So, how could YOU avoid Bitcoin hacks?
There are various reasons hackers find bitcoin wallets appealing targets. Unlike credit card payments, Bitcoin transactions are irreversible. The anonymous nature of Bitcoin also often makes proving theft difficult.
Tip #1 – Always backup your Bitcoin wallet while being offline.
Tip #2 – Don’t store Bitcoins on computers which are connected to the internet.
Tip #3 – Hackers regularly use keyloggers and ransomware tools such as CryptoLocker to target Bitcoin users. Update your anti-malware software regularly and monitor your applications for suspicious files.
Tip #4 – If you wish to gain from crypto-currency trading and not for spending use – we advise to trade on CFDs (contracts for difference) which allows you to trade the on crypto-currency prices without actually buy or store the cryptocurrency on your computer, which mean there is no chance for hacking or theft.