One of the biggest draws to cryptocurrency is the fact that the Blockchain is one of the most secure financial technologies on the planet—but it’s NOT 100% safe.
Before we start our next adventure – I wanted to talk about something that we haven’t gotten the chance to truly explore yet.
We’ve talked about cryptos, NFTs, DAOs, and other aspects of Blockchain technology for almost two months now.
We’ve talked about the profit potential of each of these, as well as some of the drawbacks—but if there is one aspect of this trailblazing tech that we haven’t touched on, it’s security.
Blockchain is one of the most secure ways to store and transfer money. There are literally thousands upon thousands of computers out there that are keeping track of each and every transaction.
That being said…NOTHING is 100% in this world. Nothing.
There always have been and always will be problems with every system ever created, and Blockchain doesn’t buck that trend.
Nothing Is 100% Safe
In fact, what you may not realize is that hackers have made off with BILLIONS of dollars in virtual assets over the past year simply by finding the tiniest window in certain cryptocurrency exchanges.
As I said, even though crypto is some of the safest money-based technology on the planet, it’s not foolproof.
There were more than 20 hacks in 2020 in which digital thieves were able to steal at least $10 million of digital currency right out from under the collective community’s nose.
Even worse, in at least six of those robberies, hackers were able to abscond with more than $100 million in one go!
By comparison, bank robberies during that same time period netted perpetrators an average of less than $5,000 per heist—and that comes straight from the FBI’s statistics.
The main difference is that no lives were put in danger through the digital robberies. It was simply hackers doing what hackers do, no guns, knives, bombs, or elaborate schemes needed.
A computer, knowledge of coding, and an internet connection are really the only things a skilled hacker needs to break through firewalls and walk away millionaires.
What’s worse, the more widespread and valuable crypto gets, the more these kinds of robberies are going to happen.
There was a time when Apple computers were practically unhackable as well simply because there were so few of them. At that point, hackers chose not to waste their time trying to get rich from malware.
However, the more computers Apple sold, the more viruses they started catching because, all of a sudden, writing these viruses was worth a hacker’s time.
That same principle can be tied to cryptos; the bigger they get, the bigger the risk is going to be for hacks like these.
More Money, More Problems
That’s why, with growing frequency, cryptocurrency experts are warning would-be crypto investors that some of these crypto exchanges are now lucrative targets for hackers.
Esteban Castaño, the CEO and co-founder of TRM Labs, a firm that builds tools so companies can track digital assets, said, “If you hack a Fortune 500 company today, you might steal some usernames and passwords. If you hack a cryptocurrency exchange, you may have millions of dollars in cryptocurrency.”
And this exact sentiment was echoed by Dave Jevans, the founder of CipherTrace (a company that tracks theft and fraud in cryptocurrencies), when he said, “If you steal the private keys to a hot wallet, it’s not like stealing a database of people’s names and Social Security Numbers. You’ve just basically stolen all their money.
Which is all fine and good, but not all exchanges are built the same.
If an exchange has money behind it and emergency funds set aside to compensate losses, all is well—but some exchanges don’t have that luxury and often go out of business.
Jevans continued, “Not every exchange is so wealthy or has so much foresight. It just goes, pop, ‘We’re out of business. Sorry, you’re all screwed,’.”
Not a pretty picture.
That’s why you should be picky when selecting an exchange to use before jumping in with both feet.
It’s why we’ve taken so much time to educate ourselves on this stuff…
No reason to go into it blind, right?
We’re too smart for that…
Hands up, head on a swivel. That’s how you survive when you find yourself in a vicious cockfight!
“Safety is something that happens between your ears, not something you hold in your hands.” – Jeff Cooper