By Oliver Freeman
The beginning of 2019 has been tough for a myriad of cryptocurrency exchange platforms. Exchanges are known to be the safest and most reliable platforms on which users can trade their cryptocurrency to legitimate buyers and sellers, with gold-standard security measures protecting both parties throughout the entire transaction. Unfortunately, 2019 has cast doubt into the minds of avid followers and fans of the various platforms, as hackers have successfully breached a number of them and disappeared into cyberspace with traders’ crypto wealth.
At the start of the year, QuadrigaCX claimed to have ‘lost’ access to $150 million USD worth of Bitcoin, Ethereum, and various other assets. Cryptopia was also a victim of a devastating attack in January, forcing it to close down for a time. The issue seemed to have passed, and the crypto exchanging community started to relax, assuming that these two cases were isolated anomalies in an otherwise well-protected system. March then came around, and DragonEx, a Singapore-based exchange, was hacked — the news was revealed in an announcement stating that user funds and the platform itself were “transferred and stolen.”
Cryptopia
On January 14th, Cryptopia suspended trading and shut down its platform for “unscheduled maintenance,” without any prior warning to its users. After 20 hours of confusion en-masse, the staff at Cryptopia released a note on their Twitter page and then a tandem letter, revealing to its users that Cryptopia had suffered a “security breach” and that they had incurred “significant losses.”
Cryptopia was, at the time, unable to provide an accurate account of the total amount lost and was unable to conduct the necessary investigation to find out. As a result, Elementus, a well-known American blockchain research unit, began to dig into the data in the search for an explanation of when and how the breach had happened. The Elementus research team produced an in-depth report outlining the severity of the attack on Cryptopia, concluding that in excess of $16 million USD worth of ERC20 tokens and Ethereum had been stolen from more than 76,000 different wallets. The ERC20 tokens included $2.4 million USD worth of Dentacoin and $1.94 million USD worth of Oyster Pearl, as well as lesser amounts of TrueUSD, ZRX, Augur’s REP, Sirin Labs, and OmiseGO.
At the end of February, the company announced that they were working to get back on their feet, with the intention of reopening the Cryptopia exchange in the near future. Alongside the announcement, the team told its users that they had calculated an estimated maximum of 9.4% of Cryptopia’s holdings were compromised.
DragonEx
DragonEx has been a force within the cryptocurrency exchange industry for seven years. It is known as a bastion of both reputability and reliability, echoed by its partnership with the Revain Review Platform. Unfortunately, on the 24th of March, DragonEx also became the victim of a savage cyber attack. Initially, the company stated that they had taken the system down to conduct “system upgrades,” but the following day announced that they had suffered from a security breach.
TokenPost reported on the latter announcement by DragonEx that, “DragonEx suffered [an] APT attack,” which led to 7.09 million USDT worth of assets being stolen, including bitcoins, ether, EOS, XRP, and XEM, among others. The posting by DragonEx has since been removed from their website. The Exchange has since announced that it is working alongside the Hong Kong Cyber Security and Technology Crime Investigation Bureau, who has started a special investigation team to analyse the security breach.
DragonEx is currently undergoing the process of assessing the full damage to its assets, while simultaneously trying to track and retrieve them. Although not fully confident in their pursuit of retrieval, they announced their intention to compensate all the affected users. To do so, DragonEx “will issue 7 million USDT value of Dragon Bond, which is 1:1 with USDT.”
The prospect of blockchain technology being successfully breached is baffling in itself, and neither Cryptopia nor DragonEx understand quite how their systems were accessed by malicious entities. Cybersecurity firms and companies are collaborating to work out what went wrong; but to this date, they are not entirely sure.
With that in mind, and the clearly shown risk of allowing blockchain exchange companies to hold cryptocurrencies and assets on your behalf, there is no time like the present to explore alternative methods of storing your crypto assets.
The Best Alternative
You have two choices when it comes to cryptocurrencies: you can leave your assets in the hands of a third party, or have them secured on a platform that only you can access. It would make sense to avoid leaving your cryptocurrencies in, potentially, insecure accounts on the various crypto exchanges that you may use, which have proven themselves to be vulnerable to security breaches. You need to transfer your assets over to a secure crypto wallet, instead.
What is a Cryptocurrency Wallet?
A cryptocurrency wallet is the blockchain equivalent of a bank account, run through software. Cryptocurrency wallets are a safe haven where you can store any currencies that you possess. A wallet is designed to monitor and store your public and private keys, platform your cryptocurrency transactions, and interact with a myriad of blockchains.
There are numerous wallets available on the blockchain, and they all vary. One thing that is consistent, however, is the inclusion of private keys — secret codes which allow you to use your coins in transactions. These private keys are stored and secured within your wallet, on the platform of your choice, and are only accessible to you.
Why they Suit You
The wallets are diverse and accessible to all, through various methods. Each wallet can be accessed through a mobile application, a website on your computer, or with hardware which stores your keys offline. There are two types of classifications. They are called ‘hot’ and ‘cold’ wallets.
A Hot or Cold Wallet
Hot wallets are connected to the internet at all times, through computer and mobile software. They can be accessed by the user at any time from the cloud. If you regularly trade cryptocurrencies, a hot wallet is the ideal storage method for you. Just remember that as long as you are connected to the Internet, you may be susceptible to prying eyes.
Popular options:
Cold wallets are the polar opposite, as its name suggests. They are situated on hardware — a USB stick, usually — and are not connected to the Internet, which provides an offline haven for your cryptocurrency assets. With a cold wallet, you can receive funds at any time, but nobody can transfer them out. If cryptocurrencies are part of a long-term investment plan, a cold wallet is perfect for keeping them secure for the duration.
Popular options:
MyEtherWallet (MEW) has introduced a new form of hot wallet, created by a team who are dedicated to bringing their users the most secure cryptocurrency haven, online and offline. MEW supports a number of different wallet types, including hardware wallets such as Ledger Nano S or Trezor, and third-party wallets like MetaMask.
Theft and Scams
Cryptocurrency wallets will keep your currency safe as every private key is unique and generated in a secure manner — they are controlled and accessible. The only fault that can be found in a wallet is its user; if you choose to generate your keys on a compromised computer, or you generate them while others are watching, the security of your cryptocurrencies becomes compromised.
Unfortunately, human error or malicious human intent is the very reason for this article. Blockchain technology is known to be an impenetrable power, but recent security breaches of cryptocurrency exchanges have refuted this belief. Cryptocurrency wallets are the option that you should choose to secure your funds that currently sit on crypto exchanges to ensure that any future breaches to third-party software do not negatively affect your personal assets. That said, it is clear the DragonEx and Cryptopia are looking to resolve their unfortunate breaches while implementing better security standards.
You can track the progress of both companies on Revain, a peer-to-peer decentralised review platform. Revain provides you with insight into the stature and ratings of cryptocurrency exchange companies and features a community of avid tech-savvy, blockchain enthusiasts, who will advise you on reputable and reliable exchanges, wallets, and keep you current on the newest advancements as they develop.
Join us!
|Telegram | Bitcointalk | Facebook | Twitter | Reddit | Website | Slack|
