Digital currencies and the software developed to track them have become attractive targets for cybercriminals while also creating a lucrative new market for computer-security firms.
In less than a decade, hackers have stolen $1.2 billion worth of Bitcoin and rival currency Ether, according to Lex Sokolin, global director of fintech strategy at Autonomous Research LLP. Given the currencies’ explosive surge at the end of 2017, the cost in today’s money is much higher.
“It looks like crypto hacking is a $200 million annual revenue industry,” Sokolin said. Hackers have compromised more than 14 percent of the Bitcoin and Ether supply, he said.
All told, hacks involving cryptocurrencies like Bitcoin have cost companies and governments $11.3 billion through lost potential tax revenue from coin sales and illegitimate transactions, according to Susan Eustis, chief executive officer of WinterGreen Research. The blockchain ecosystem -- the decentralized “distributed ledgers” that track crypto transactions -- is also vulnerable.
Those losses could snowball as more companies and investors rush into the white-hot cryptocurrency market without weighing the dangers or taking steps to protect themselves.
Super-Secure?
Blockchain records are shared, making them hard to alter, so some users see them as super-secure. But in many ways they are no safer than any other software, Matt Suiche, who runs the blockchain security company Comae Technologies, said in a phone interview.
And since the market is immature, blockchains may even be more vulnerable than other software. There are thousands of them, each with its own bugs. Until the field is winnowed to a few favorites, as happened with web browsers, securing them all will be a challenge.
“Each implementation is going to have its own problems,” Suiche said. “The more implementations, the harder it is to cover all of them.”
Blockchains can track identity information, property records and even digital car keys, not just cryptocurrency. But of course, they do that too, and stolen Bitcoins can be converted into hard cash.
So while hacking a blockchain may be harder than breaking into a retailer’s database, “the rewards are greater,” according to Andras Cser, an analyst at Forrester Research. “You have much more information you can steal.”