The Strategist

Experts: Crypto currencies are not reliable

01/22/2018 - 09:56

According to cybersecurity experts, crypto-currencies and the blockchain technology itself are not as resistant to theft and burglary as it is commonly believed. In less than a decade, criminals managed to steal at least $ 1.2 billion from users and exchanges accounts in Bitcoin and Ethereum.

Marco Verch via flickr
Marco Verch via flickr
In January, the world's first fully decentralized payment system - Bitcoin - turned nine years old. Its technical base - a public data register, copies of which are stored on the computers of system participants - was supposed to ensure the safety of users and protect them from fraud. Indeed, there have been no recorded cases of Bitcoin blockchain’s breach.

However, this did not prevent hackers from stealing from users of the system hundreds of millions of dollars in bitcoins. They are successfully attacking crypto exchanges or users' computers, where their wallets with crypto-currency are stored.

Lex Sokolin, a head of the fintech division of the research company Autonomous Research LLP, told Bloomberg that in less than ten years the amount of money stolen by hackers from the owners of the two most popular crypto-currencies (Bitcoin and Ethereum) amounted to $ 1.2 billion without taking into account currency fluctuations. If the attackers decided to cash these funds now, then they would have tens of billions of dollars on their accounts. After all, only in 2017 the cost of one bitcoin, for example, has grown from $ 1 thousand to $ 18 thousand and in early January, his rate reached $ 20 thousand. "It seems that hacker attacks on crypto-currencies bring criminals $ 200 million a year, - said Mr. Sokolin. At the same time, according to his company's calculations, 14% of the bitcoins and ethers released during all these years got in the hands of hackers.

According to the general director of WinterGreen Research, Susan Eustis, the theft of crypto-currencies cost companies and governments $ 11.3 billion. This translates into lost tax deductions from transactions for the purchase of digital currency and transactions conducted outside the law.

However, experts in the field of cybersecurity say that the public registries themselves are also very vulnerable to hacking. Their reliability largely depends on the scale of the network and the number of miners. After all, they ensure the correct operation of the system. However, today the number of detachments is so huge, and their scale is so small that breaking their work is not a big deal for hackers. In addition, often vulnerabilities penetrate the blockchain at the stage of writing computer code for them. "Every case of application (blockchain) has its own problems. So, the more blockchains, the more difficult it is to ensure the security of all of them," explained Matt Suiche, head of the provider of cyber security services, Comae Technologies, to Bloomberg. That's why he sees only one global solution to this problem - to wait until the blockchain market comes to a state with two or three dominant projects.