Bitcoin is a technology solution for a financial problem, but it’s undermined by poor tech infrastructure By
Katia Moskvitch Following a cyber-attack on South Korean bitcoin exchange Coinrail over the weekend, the cryptocurrency suffered yet another massive sell-off, destroying a whopping $42 billion of its market value. Coinrail announced the hack in a tweet, triggering a $500 (£372) drop in the space of just one hour; overall, the cryptocurrency suffered a 10 percent drop to a two-month low, dragging down many other virtual currencies as well.
Cryptocurrencies were always positioned by their fans as ultra-secure stores of value, as every transaction was verified by blockchain, a form of distributed ledger. In real life, though, storing your cryptocurrency in private wallets online – so that it’s actually easy to use – seems to be about as safe as putting it behind a bench in a public park.
Don’t panic – the problem is not the bitcoin blockchain itself, which is still much more secure than today’s banking networks – the problem is elsewhere. “The security problem is with the user access to the bitcoin and other crypto blockchains,” says Gartner security expert Avivah Litan.
The Achilles heel is the security protocols of the cryptocurrency exchanges that store users’ private wallets. By
WIRED Most exchanges – such as, in this case, Coinrail – simply haven’t invested enough in strong and smart security, including fraud analytics and continuous strong and risk-based user authentication.
“My guess is that they are too greedy and don’t want to spend the money. But they will get burned for this attitude as has been the case,” says Litan. Read more from wired.co.uk…
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