Page 121 - Cyber Defense Magazine for August 2020

Shortcuts Lead to Cryptocurrency Vulnerability

Although fiat money can be counterfeited, it’s almost unheard of with the modern protections applied in
the money printing presses. This is not the case with Bitcoin and other cryptocurrencies. There are many
cases of mass Bitcoin thefts/hacks from crypto exchanges, such as Japan’s Mt. Gox, Bitcoin7, Bitomat,
Linode, BTC-e, Bitcoinica, Bitfloor, Vicurex, and Hong Kong’s Bitfinex as the largest case of hacking with
120,000 BTC stolen.

Moreover, an alternative marketplace powered by cryptocurrencies, Silk Road, greatly harmed the public
image of new digital money. Operating in the underbelly of the internet, the Tor network, Silk Road
facilitated many hacker attacks, money laundering, and blackmail operations. Criminal activity in this
sector not only harms the directly-affected crypto-holders, but it suppresses further adoption of
blockchain-powered digital money.

In the best of times, outside of stablecoins, cryptocurrencies suffer from volatility compared to fiat money.
Big crypto exchange hacks cause the price of Bitcoin to plummet, which then drags down all lesser
cryptocurrencies with it. Inevitably, this further increases cryptocurrency volatility and decreases its usage
as money.

With all this in mind, it bears emphasizing that blockchain still remains effectively unhackable. People
lost money from crypto exchange hacks because users gave their private keys to these companies. By
doing that, a user forgoes a vital security feature of cryptocurrencies – private and public keys – and
places all the trust into crypto exchanges for the sake of convenience.

Unhackable Blockchain is Only the Beginning of Cybersecurity

Let’s face it. If digital currencies operated under any other system other than blockchain, only hardcore
enthusiasts and first-time adopters would flirt with that kind of digital money. As it stands, blockchain, as
a distributed ledger across nodes, can withstand any malicious attempts at record alteration. This is why
numerous governmental and corporate organizations, from military to healthcare and art galleries, have
started to view blockchain as a low-cost, high-end implementation of cybersecurity.

As we have seen with the latest hacking of Twitter accounts, the human factor is the weakest link in the
cybersecurity chain. In this instance, they befriended the Twitter employee on Discord and then
convinced the employee with some extra incentives to share the administrator account.

Likewise, Bitcoin thefts and breaches occur outside the impervious blockchain:

• Opting to give crypto-exchanges your private key instead of using private wallets – hard, mobile,
or desktop. Then, you must rely on the company in charge of the crypto exchange to have
trustworthy employees and security measures.
• Opting to have a private wallet with both private and public keys, but not securing it enough.
Usually, by leaving passwords and word phrases in other unprotected locations and files.

Cyber Defense eMagazine – August 2020 Edition 121
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