As far as cryptocurrency is decentralized, blockchain-based currency, it is considered hack-proof by nature. But people, having digital money and crypto exchanges become targets of hackers more often than the currency itself.
Interestingly, bitcoin has never been hacked, but there were cases when bitcoin was stolen. Is this possible?
Why is Crypto Safe?
Nowadays, there are thousands of digital currencies. These digital assets are entirely digital and are stored in digital wallets or cryptocurrency exchanges. There are two wallets: a hot wallet, an online app, and a cold wallet, a hardware device that can work offline. In the wallet, owners store private keys that give access to the assets. So stealing crypto is not taking a wallet with currency and running away.
Cryptocurrency transaction history is recorded in a distributed ledger called a blockchain. There is not one copy of the blockchain. Instead, there are thousands stored in computer network nodes. New transactions and people involved should go through digital validation to prevent fraud.
If someone wants to hack distributed ledgers based on blockchain technology, he has to alter data in more than half of the computers involved. It means that there must be more than 51% of attacks simultaneously. That is unlikely to happen.
A hacker, who wanted to alter the distributed ledger of Bitcoin or any other network based on blockchain technology, would need to hack not one but more than half of the participating computers (51% attack).
Why has Crypto Been Stolen?
First, we should differentiate between, for instance, speaking about bitcoin, that there is a bitcoin network and there are bitcoin users. Furthermore, the bitcoin blockchain is highly protected by the underlying cryptography and distributed ledger system. At the same time, funds kept in wallets are more prone to vulnerabilities, especially in hot wallets that are constantly online.
There were cases when digital money was stolen because they were stored securely. Cryptocurrency exchanges are profitable targets for hacks since most exchange hacks were not solved.
The Biggest Crypto Thefts
The first exchange hack was Mt.Gox, considered the largest hack since Bitcoin’s emergence, resulting in an exchange bankruptcy in 2014. Due to unsecured measures, hackers managed to steal 850,000 BTC.
In January 2022, one of the largest exchanges, crupto.com, confirmed that more than $30 million in cryptos from 483 customers’ wallets were stolen. At first, the company announced that they stopped withdrawals because numerous customers complained about suspicious activity they noticed on their accounts.
Furthermore, they assured customers that all funds were safe. However, the hackers tried to withdraw around $15 million from cryptocurrency exchange ETH, $18 million BTC, and more than $66 thousand in other currencies. The company states that they prevented unauthorized withdrawals, but analysts note that $15 million of ETH has gone away.
According to data by NBC News, there were more than 20 hacks in 2021. As a result, the number of funds stolen from the exchanges and cryptocurrency projects reached $10 million. They added that digital robbers stole over $100 million in six cases. Compared to bank robberies, where thefts could enrich themselves for less than $5,000, the scales of digital robberies are impressive.
In August 2021, there was a theft of $610 million from the crypto project Poly Network. The hackers returned the funds showcasing the security risks of the platform. The character of hacks became a more high level demonstrating potential vulnerabilities of gaining popularity, the DeFi solutions.
Crypto investments are more secure than bank deposits. However, the rising interest of digital robbers in the fast enrichment reveals some existing risks of investments. If you are not sure about crypto rankings by security, you may find a lot of information and feedback on the Internet.