Cryptocurrency platforms have been the hackers’ favorite. Bitcoin exchanges and trading platforms figure on top of their list. Hacking incidents including the latest Bitfinex hack stands proof of that. But with established Bitcoin platforms opting for high-security standards, hackers are now settling for the next best thing, cryptocurrency startups.
A recent report published by BBC describes a security incident faced by one of the small Florida-based digital currency startups to prove the point. The article describes a hacking attack on Krypton, which left the startup short of $6,000 despite the best efforts of the team to thwart waves of attacks in the midst of Hurricane Hermine. However, the damage was limited to a ‘small’ sum due to their sustained effort to secure the platform, which otherwise would have left them much poorer.
The attack faced by Krypton was not a one-off incident as another cryptocurrency startup Swift was also said to have come under a similar attack. Attacking cryptocurrency platforms usually offer high rewards at a considerably lesser risk compared to hacking banking institutions. The main reason being the nature of cryptocurrency and its legal and regulatory standing. Also, most cryptocurrencies offer a certain level of anonymity which makes it easier to spend the digital currencies on a later date.
According to Garrick Hileman, an economic historian at the University of Cambridge, there have been at least 600 different cryptocurrencies created since the emergence of Bitcoin in 2009. Most of these cryptocurrencies have been targets of hacking attacks, eventually pushing them out of the cryptocurrency ecosystem.
Startups, especially those using specific blockchain platforms are more vulnerable to attacks mainly because of the weaker security as they may not have enough computers and servers on the network to verify transactions. Such platforms with lesser processing power become easy targets for hackers with superior processing power. The attacks on Krypton and Swift are attributed to their use of Ethereum, which has been under sustained attack for weeks.
Bitcoin network, due to the sheer hashing power involved has proven itself to be the most secure blockchain platform so far. With many financial institutions opting for private blockchains, instead of public Bitcoin blockchain, they may also end up facing similar troubles as Krypton and Swift but at a different scale.
It is now imperative for digital currency and blockchain startups to choose the most secure and robust distributed ledger network. In addition, they should better invest in state-of-the -art security features to ensure the safety of funds on the platform.
Ref: BBC | IBS Intelligence | Image: Shutterstock