Today another major hack occurred with intruders obtained $75M in bitcoin from a cryptocurrency exchange in Slovenia. This is actually not the first BitCoin hack, nor is it even the biggest attack on cryptocurrency. At the same time, we keep hearing how safe and impervious to hacks online cryptocurrencies like Bitcoin are supposed to be.
So what is going on here?
Cannot Succeed Alone
Imagine that you are suddenly provided an awesome futuristic car that has rocket boosters, amazing displays, incredible music and every feature you can imagine.
But wait, now suppose the car was provided old, bald tires that could blowout any second and could not tightly grip sticky glue.
Then you and your super-car-on-bad-tires are placed at the top of a long winding road…
In the dark…
In an ice storm
How are you loving your awesome new car now?
The issue with cryptocurrencies is not what they do but where they are operating. First, this advanced, highly secure transactional system operates on devices of unknown origin, mostly without an identity in sight. Blissfully ignorant of the very devices that are supporting them these exchanges provide the same access to devices that might be good and solid or compromised and ready to wreak havoc.
Then these amazingly secure Bitcoin-based systems, with their unknown devices, are placed in highly susceptible environments. Sure they all use encryption to some degree but, honestly, WHO CARES.
Look through all of the hacks that have occurred in…longer than it matters to go back…and you will see that NOBODY tries to break encryption.
Why bother when it is much easier to work around this “protection” and go straight to those unknown devices.
How, you might be asking?
Easy – there is literally no communications protection operating underneath these cryptocurrencies so all a hacker needs to do to “get in” is place a device on a network with other cryptocurrency devices.
So, in the case of NiceHash, getting a device onto any financial network in Slovenia would suffice,
Security Is Layered…Like An Onion
Security is not just about placing one product somewhere and then saying that everything is good. In fact, products are horrible in our minds as true security is a service.
To “fix” BitCoin, everything needs to be locked down – networks, devices, everything. Only by providing a secure foundation (and not getting in the way of the cryptocurrency processes) can these new financial exchanges ever become secure.
Until then, expect more of these thefts, expect more vulnerabilities to be found and expect cryptocurrency efforts like Bitcoin to join every other connected device in suffering from increasingly effective online sabotage.