There is a large number of organizations using blockchain for carrying out several business functions. With this, the need to hire blockchain developer is increasing at a fast pace. Blockchain’s amazing support for recording transactions over a distributed network of computers is the reason for its widespread popularity. Blockchain technology has been known as “unhackable” because of its secure servers and unalterable transactions that have made this technology secure against hacks. However, recent Bitcoin blockchain breaches, unfortunately, show that hackers can easily access blockchain and it can be hacked. Let’s have a look at the largest Bitcoin blockchain breaches that took place till date:
Before the hack, Mt. Gox was serving as the largest Bitcoin exchange based in Japan and was responsible for handling over 70% of Bitcoin transactions. At the beginning of 2014, it was serving well and by the end of February of that year, it was bankrupted due to hacking. The attacker maliciously obtained the credentials of the auditor and changed the nominal value of BTC to 1 cent. After the alterations, the attacker transferred BTCs from clients to sell at a low price and purchased some BTCs back from another account.
Bitfinex faced the second largest Bitcoin hack after Mt.Gox. It seems that investing in the large Bitcoin exchanges also leads you towards the target of attackers. Bitfinex was targeted by attackers in August 2016 and around 120,000 BTCs were stolen in this hack. It was surprising that this attack happened even after a multi-sig architecture. The multi-signature wallet scheme requires users to have more than one key to authorize a transaction. Attackers found the vulnerability of this architecture and exploited it. However, the attack harmed Bitfinex a lot but the best thing is Bitfinex issued BFX tokens to the victims, which helped them recover their loss.
Bitcoinica was attacked by the hackers three times. In the first attack, hot wallets of Bitcoinica that were hosted on Linode’s server were decrypted by the hackers. This resulted in the loss of 43,554 BTC. In the second attack, hackers maliciously accessed their database and illegally used the information of private identification to steal 38,000 BTC. In the third attack, hackers stole 40,000 BTC, which were later recovered as they were held in Mt.Gox as per the reports. It was said that the liquidation of funds will happen and will be distributed to the clients to recover the loss but however, no further reports have been received yet regarding the distribution.
Before the hack, Bitfloor was the fourth largest U.S. exchange. After the attack, it faced a loss of 24,000 BTC in September 2012. All the funds were held in the “hot wallet” on the server and hackers took advantage of it. They accessed the accounts of the clients with the help of backup keys and made transactions. Less than 1 year after the hack, the company closed down giving a reason for closing their accounts by the bank. With this attack, blockchain software development company of other exchanges learned a lesson of using significant cold storage instead of hot wallets. Bitfloor could have prevented the hack if like a vast majority of the exchanges, it also had reserved coins kept offline in a secure location.
Binance is one of the largest Bitcoin exchanges that handles over $2 billion in daily volume. Binance was hacked recently on 7th of May 2019. This breach does not result from the hackers accessing the internal system or database. Instead, they spent a lot of time in gaining access to a large array of user API keys, 2FA codes, and other information. The attackers took help from well-known attack vectors and social engineering tactics. They did it so well that they were able to initiate a request from the client’s account to withdraw the amount. The 7,000 BTC i.e. 2% of total Bitcoin holdings were transacted on their attempt but thankfully, it only impacted Binance’s hot wallet funds. All deposits and withdrawals were put on hold immediately by Binance after noticing the breach.
Going through these Bitcoin blockchain hacks, you must be terrified to step into the blockchain world. But there is no need to worry now as these hacks prove to be very helpful. Now, blockchain software development services providers are keeping a close eye on the mistakes made by these Bitcoin exchanges. If somehow the hackers try to attempt a breach, blockchain developers, with the use of the most advanced blockchain auditing tools, will be able to track stolen coins. So, there is nothing to panic about as many enhancements in crypto security have been made after these breaches, keeping the security at its best.