Crypto: Hacking Concerns

I want to go back to something that I’ve spoken about often, which is cryptocurrencies and the blockchain technology behind it. I’ve said often enough that it’s just a trade, not a store of value or an investment, and I’ve also said my main issue with it is the potential for unwanted government intervention.

Well a couple days ago, another one of my largest concerns resurfaced, and that is hacking. The proponents of the technology who claim it will replace paper currency make the claim that one of greatest advantages is that the blockchain technology is impervious to hacking. There have actually been a number of stories over the last few months detailing small hacks of currency exchanges, but the story that just came out really takes the cake here.

The story was about the exchange platform called Coinbase, which also has a newsfeed and live pricing. In particular the ledger of a coin called Ethereum Classic was the issue at Coinbase. The ledger is built on the blockchain itself and shows the history of transactions, just the same as the ledger in your checkbook or online bank account shows your transaction history. Coinbase noticed that the ledger for this coin, Ethereum Classic, was under attack, and about $1.1 million in Ethereum Classic coins were used for multiple transactions. And the same hacker did this on Gate.io as well for another $200K of coins.

The total between the two hacks is $1.3 million.  While compared to the total market cap of all cryptos combined this seems like a minimal amount, it’s still theft and it’s still evidence of flaws in the system. After all, nothing really stopped the hacker from stealing $130 million.  In fact the total amount of coins that were hacked since 2017 now exceeds $2 billion, and if you also include lost coins because the exchange owner died or other circumstances, the total is far in excess of the $2 billion that were hacked. Industry analysts think an additional $1 billion more has been hacked and stolen.

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Disclaimers: The contents of this article are solely my opinion, and do not represent neither the opinion of this website nor its owner(s), nor any employer whether by contract or for wages.  ...

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