In the wake of this year’s Bitcoin & Ethereum hacks, Edgy Labs turns to the “how” behind this next-gen consumer fraud.
Rather, it’s due to flaws in each of these platforms’ code.
This might seem rather familiar, since, a few months ago Bitcoin exchange company Yapizon was also hacked and over 3816.2028 Bitcoins were stolen. You may have also heard of Cloud Mining Ponzi schemes & scams such as Gawminers, Hashocean, Cointellect, Biteminer, Hashpoke, Hashinvest.
Why have these “advanced” platforms been prone to attacks lately, while other (smaller and arguably “less secure”) cryptocurrency platforms have been left unaffected?
Simply put, the more complex security protocols are, the less safe they become. Since codes are written and peer-reviewed by human beings there will inevitably be answers in the code. This is why simplicity and testing are the backbone of digital security.
How did the 2017 Bitcoin & Ethereum Hack Happen?
The 2017 Bitcoin hack was caused by a flaw in the SS7 system (and had nothing really to do with cryptocurrency itself).
Ethereum is based on Bitcoin technology, but smart contracts and other features of the code improve upon Bitcoin’s base. This is actually the very thing that makes it susceptible to hacks: it is overly complex. Plus, Ethereum is not centralized in any physical place, but rather expands a huge, decentralized network.Moreover, Ethereum is one direction: if flawed code is put out there, it stays out there.
Interestingly, most blockchain developers come from the web development world, and blockchain code is written to be similar to web developing code. However, the two are very different and have very different purposes.
Does this mean Bitcoin is dead?
In a word: No.
Most people wouldn’t stop using banks altogether because a single bank in the world had been robbed. Instead, they might, however, demand greater security measures. The same principle applies here.
As Brian Stretch, U.S. Attorney for the Northern District of California said:
“Just as new computer technologies continue to change the way we engage each other and experience the world, so too will criminals subvert these new technologies to serve their own nefarious purposes”.
Our job as consumers of ether bitcoin (and others) is to innovate cryptocurrency security and develop safeguards against the exploitation we know currently exists.