Bitcoin hasn’t had the smoothest ride to the top. It’s been a contentious phenomenon ever since it was created. Despite its harsh critics and its many ups and downs (literally), the value and adoption of Bitcoin has defied expectations time and time again.
Let’s talk about the downs: you’re probably aware of numerous Bitcoin hacks over the past few years. Despite mainstream news using these hacks as their case against Bitcoin, some of the threats are very real.
The most disturbing of them are the stealth attacks that hit the average, private investor who never know about the attack until days, weeks, or months later they find out a massive portion of their wealth has vanished.
The important thing to remember is that if you were affected by these hacks, you could have kept your funds safe if you followed just a few straightforward steps that will be discussed later in this article.
Firstly, you can look through some of the most notable Bitcoin hacks and see what you should try avoid in the future.
The mainstream media traditionally have focused their attention on reporting negative stories when it comes to Bitcoin. They have long talked about the demise of this cryptocurrency and detailed the latest set of hacks alongside the amount of funds that have been lost.
This is one of the main reasons why these hacks may still be fresh in your mind.
Perhaps the most high-profile Bitcoin hack was that of Mt. Gox. This was a Bitcoin exchange located in China and they had been active in the space since 2010. At the time of the hack, they were the largest exchange in the world for Bitcoin. However, they suffered two grievous attacks that left them in ruins.
The initial attack occurred in June 2011 after a hacker managed to get their hands on the credentials of one of the auditors for the exchange and subsequently used this access to transfer 2,609 Bitcoins to their own address. At today’s price, this hack would be worth in the region of $17 million.
This hack led to the exchange having to close its operations for a number of days, but it didn’t significantly affect the reputation or standing of Mt. Gox in the crypto community.
It was the second hack in 2014 that was the big one. By this stage, about 70% of all Bitcoin transactions globally were going through the Mt. Gox exchange. In February 2014, they suddenly halted all trading, closed their platform and then filed for bankruptcy.
It was revealed that about 850,000 Bitcoin was discovered to be missing, which was worth $450 million at the time (~$56 billion at today’s prices). Approximately 200,000 of these missing coins were subsequently found, but the rest was gone forever.
There were many theories about what happened to these stolen funds, such as fraud, theft and mismanagement. Following an investigation in 2015, a Tokyo-based security company came to the conclusion that the Bitcoin was stolen from the Mt. Gox hot wallet over a period of time starting at in 2011.
Investors were never able to recover their funds and no compensation was given to them.
BitFloor was another popular exchange and it had its headquarters located in New York. It was in September 2012 that they were hacked, resulting in approximately 24,000 Bitcoin being stolen. This would amount to $160 million at today’s prices. It wasn’t until April 2013 that they finally stopped operating as an exchange following the closure of their bank account.
This exchange had been a popular option for investors due to their variety of funding options and relatively quick withdrawal process. The only identification they required was some form of government-issued identification upon withdrawal.
Having started operations in 2011, it was September 2012 when they revealed that their security had been breached and 24,000 Bitcoin was stolen from their wallet. This led to customers not being able to access their funds for a number of days, as there were not enough funds in their reserves to meet deposited amounts.
It was revealed that the hackers were able to get their hands on unencrypted private keys as they had been stored online for backup purposes.
The BitFloor users did not lose out, with everyone being refunded, but eventually they were forced to close.
South Korea-based Bitfinex are only behind Mt. Gox when it comes to the largest Bitcoin hacks in history. Hackers identified a vulnerability within the architecture of the multisig wallet for both BitGo and Bitfinex. They were able to exploit this weakness and subsequently steal 120,000 Bitcoin, which is worth approximately $800 million at today’s prices.
These funds were stolen from customer’s accounts and this hack led to the price of Bitcoin dropping by almost 20%.
Users of the platform did receive compensation in the form of BFX tokens that were issued by the exchange and these could be exchanged for US dollars. This was done on a schedule over time to help ensure that stability was maintained. Bitfinex announced in April 2017 that all of these BFX tokens had been bought back, which meant that customers had completely recovered all of their lost funds.
The exchange has recovered since this hack in August 2016 and they are currently the largest BTC/USD market in the world.
Bitstamp was created in 2011 and was a Bitcoin exchange based in Slovenia that aimed to be a competitive alternative to Mt. Gox. However, it suffered a similar fate to Mt. Gox at the beginning of 2015 when it also came under attack.
They announced on January 4, 2015, that the operational hot wallet at Bitstamp had been hacked, with 19,000 Bitcoin being stolen. This would be worth about $126 million at today’s prices.
After this attack, operations on the Bitstamp exchange were suspended until the hack could properly be investigated. This hack could have been a lot worse, but Bitstamp had the majority of their Bitcoin reserves kept in cold storage systems that were highly secure.
Therefore, they were able to continue operating as normal and develop a strong user base once more.
Following the attack, they took measures to beef up their security levels to try to prevent a similar attack from happening again in the future.
One of the earlier Bitcoin hacks came in August 2011 when a wallet service called MyBitcoins vanished overnight from the internet. In the early years, online Bitcoin wallets were seen as being convenient and easy to use, but many people found out the hard way that things were not so rosy. A lot of these wallets were very insecure or they were complete frauds.
MyBitcoins was one of the most popular wallet providers in the earlier days of Bitcoin until they mysteriously vanished in August 2011, with the website saying that they had been hacked.
While there are no solid estimates as to how much Bitcoin was lost, it had been a popular wallet service. Many users were suspicious of the site’s claims of being hacked, with many believing they had simply been defrauded.
As there was no proper regulation of these wallets and not much in the way of reviews from customers in the early days of Bitcoin, it was nigh on impossible for a user to be sure that they could rely on a given wallet provider.
There have been interesting cases of individuals having their Bitcoin hacked over the years, some of them being prominent people.
In the early days of 2011, the Bitcoin community was small and condensed. It was a lot more straightforward to mine Bitcoin, with normal PCs being able to easily mine thousands of Bitcoin.
This is how a well-known user on the popular Bitcoin Talk Forums called allinvain managed to gather a stash of 25,000 Bitcoin. You could purchase Bitcoin for pennies back in 2010, but by June 2011 they had reached $20, which meant that the stash allinvain had was then worth approximately $500,000 ($166 million at today’s prices).
It was in June that allinvain woke up one day and noticed that a massive portion of his Bitcoin balance had suddenly disappeared. He suspected that his PC was hacked and the Bitcoin had been robbed off the hard drive and subsequently transferred to the wallet of the hacker.
In another case, a man had $155,000 worth of Bitcoin stolen from him after using the public Wi-Fi in a restaurant. This happened in Austria after a man had used the unsecured network to check his Bitcoin balance. The hackers subsequently were able to transfer his holdings into their own wallets, with these funds being unrecoverable.
Finally, someone as prominent as the Apple Co-founder Steve Wozniak has fallen victim to a Bitcoin attack. He outlined how he had sold 7 Bitcoin (worth about $50,000 at today’s prices) to a person who used a credit card to pay him.
It turned out that this card had been stolen and the transaction was cancelled before it had time to clear. This meant that Wozniak lost both his Bitcoin and the funds he had sold them for.
Enter Ian Balina as the most recent high-profile hack. Ian Balina is an outspoken altcoin evangelist, who proudly displayed his impressive portfolio across Twitter. He also kept his entire portfolio on hot wallets.
During a live event on April 17, 2018, $2 million of Balina’s portfolio vanished before his (and everyone’s) eyes.
As you have seen, Bitcoin hacks can come in many different shapes and sizes. There are many different ways in which these attacks can occur, so it is important that you take the appropriate action to prevent your hard-earned Bitcoin from being stolen too.
It is obvious from the above examples that no matter how prominent a given platform may be, you can never be certain that your funds are safe when you leave security in the hands of another party. They may have security vulnerabilities or they may have staff members who are looking to make a quick buck.
Funds that are kept in online wallets are easy targets for hackers. They often have significant vulnerabilities that can be exploited. While you may have accounts with some of the affected platforms as you need a place to make your trades and exchange fiat currencies, you should never store your funds there.
Even if you are not using an online wallet, as in the case of BitFloor, if you leave your private keys unprotected in a vulnerable place, they can and will be exploited by hackers. You can even see how the user on the Bitcoin Talk Forums had 25,000 Bitcoin that were stored on his hard drive stolen.
Using unprotected Wi-Fi networks in public places has become a big no-no in recent years, as these networks can be infiltrated and hackers can observe you entering your passwords for your online or desktop wallets or banking information.
The only failsafe option to protect your funds from hackers is to invest in a hardware wallet, such as the CoolWallet S. This is a device that is not connected to the internet, meaning your funds cannot be stolen by hackers.
With this device, you can keep your Bitcoin protected in an isolated, offline card. You can easily use your coins on-the-go thanks to the Bluetooth technology that is encrypted and it can be paired with your smartphone device.
If you are interested in having complete control over your Bitcoin security and ensuring you don’t become a victim of a Bitcoin hack, look no further than the CoolWallet S.
When you are dealing with a cold storage hardware wallet like the CoolWallet S, you will have no issues with your Bitcoin being compromised once you keep it in a safe place.
This is the perfect mobile cold storage hardware wallet for your Bitcoin, Litecoin, Ethereum, Ripple, and Bitcoin Cash with other coins or tokens supported soon. It is convenient to use and your funds are kept extremely safe.
What makes it stand out from other hardware wallets, aside from its sleek design and quality security features, is that it is the very first mobile hardware wallet.
While other wallets are immobile and have a lengthy setup procedure, the CoolWallet S simplifies the entire process.
Rather than utilizing a USB port, like every other hardware wallet, transactions on the CoolWallet S are completed utilizing encrypted Bluetooth technology.
If you are serious about your Bitcoin security, a cold storage hardware wallet is an essential purchase, saving you a lot of time, money, and stress in the process.