Bitcoin has climbed the trade market ladders like no other
Bitcoin has climbed the trade market ladders like no other asset in the history, and even after a decade of existence along with the debate of it being a bubble, Bitcoin still stands as one of the most attractive forms of investment today.
From being valued at $0 in 2008 and reaching its highest value of around $20,000 in December 2017, speaks a ton of the potential that the digital asset has both in terms of market value and technical abilities.
Bitcoin works on the principle of distributed ledger technology powered by blockchain. The blockchain technology is often marketed as non-hackable and tamper-proof, which is true to a certain extent. However, that does not make Bitcoin resistant from scams or hackers, as these people do not necessarily have to deal with the technology but with human carelessness and shortcomings.
This articles would discuss the 5 major Bitcoin hacks that have cost the investors a ton of money and also discuss why Bitcoin hacking is a thing when the technology it works on has always been marketed as tamper-proof or unhackable.
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How Hackers Get Hold of Bitcoin, If it’s Aided By The Tamper-Proof Technology
Whenever you hear a piece of news about Bitcoin being hacked, it’s just like any other heist and has nothing to do with the technology it works upon in the first place. All the hacks and heist are a direct or indirect result of human negligence or error.
Often the major cryptocurrency heist occurs on Crypto exchanges due to inadequate security measures or an error. Mind you it’s still difficult for anyone to get access to your private key or offline wallets as they promise great private key management. However the same can’t be said about the exchanges where the majority of the users hold their Bitcoin asset.
The major problem with Bitcoin hack or cryptocurrency theft is that the government are already not a big fan and events like these only give them another reason to point out why Bitcoin or crypto is not a good alternative.
Technology actually works in the favour of thieves and scammers as it is quite difficult to recover the lost Bitcoin since there are no hard-set rules for operating with a digital asset, but the same technology which promises to help you do anonymous or instantaneous transactions works in favour of hackers too. Let us look at 5 major hacks on the Bitcoin and how it was made possible.
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Top 5 Bitcoin Hacks In History
1. Allinvain, June 2011
The first ever record of Bitcoin theft dates back to June 2011 when Bitcoin was just an internet phenomenon and held a value less than the dollar. The victim was a user who went by the alias Allinvain.
The user left a note on the bitcointalk.org, stating that 25000 BTC were stolen from his PC on June 13. The victim even posted the address where his BTC was transferred and asked for the community member to help. However, his Bitcoin was gone forever and could never be traced or recovered.
Looking at the current value of Bitcoin, Allinvain would have been a Bitcoin millionaire.
2. Mt.Gox, June 2011 and February 2014
Mt. Gox holds a special place in the Bitcoin folk fair, as the Japan-based crypto exchange was hacked twice
In 2011, one of the hackers got hold of the Mt.Gox auditor’s compromised computer which he used to steal a large amount of BTC from the exchange valued at $8,750,000 at that time which did not take more than a couple of minutes. The security breach on the exchange made the Bitcoin prices fall to 1 cent, but it recovered quickly after the heist.
Another hack on the exchange took place in February 2014 when due to a certain technical issue the exchange suspended all its trading for over a month. The inactiveness of one of the biggest exchange of its time cut the Bitcoin prices by 36%. After a month long wait, the company declared bankruptcy and announced that the technical glitch led to the theft of 850,000 BTC worth $473 million.
3. Bitcoinica, March 2012
The March 2012 heist occurred due to a vulnerability in the shared online web host Linode and the hackers stole around 46,700 bitcoins from some of the Linode users. 43,000 BTC were kept on the exchange named Bitcoinica.
Within 2 months of the first hack, another attack resulted in the loss of 18,000 BTC, at the time Bitcoin was trading at around $5. The company was not able to survive the double-attack which led to filing for bankruptcy.
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4. Bitcoin Savings and Trust, August 2012
This was more of an organized scam where the parent company offered the investors to buy bitcoin from them and then sell it at 7% profit per week, resulting in a total 365% profit per year.
By August 2012 the company has managed to gather 500,000 Bitcoin before it defaulted. However, the law caught up with the organizers and asked them to pay back the victims a total of $40 million in respiration.
5. Bitfinex, August 2016
Bitfinex is still one of the largest crypto exchanges which receive billions worth of trading volume on a daily basis. However, the top exchange has been a victim of hacker attack itself in the past.
In August of 2016, a vulnerability in its Multisig wallet architecture led to a theft of 120,000 BTC. This resulted in the price drop of Bitcoin from $607 t0 $515 in a matter of a few hours. The good thing was that the company compensated almost everyone with their local BFX token which can be exchanged against the USD.
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