When we talk about crypto heists, we usually think of some kind of breach wherein individuals or organizations with malicious intent get access to privileged resources.
Heists in the world of cryptocurrencies can be a culmination of many things. A hacker could exploit some security lapses in smart contracts, and exchanges or illegally withdraw some cryptocurrency. All this would fall under the purview of hacking or heisting.
Blockchain technology enables users to record transactions in a decentralized manner. Additionally, there is no need for a third-party facilitator because the transactions are carried out directly between users.
Sometimes, all this sometimes brings up an image of blockchain being completely secure and unhackable, but this is not the case and in reality, blockchain networks can be hacked.
A hacker or a group could identify vulnerabilities in protocols and take unethical advantage of them, they could also take advantage of the weak security of exchanges or even strategically do what is referred to as a 51% attack.
According to data, hackers had stolen around $14 billion in cryptocurrencies alone in 2021 and this number is only increasing over time.
Techniques of Hacking Resulting in Crypto Heist
The validation process of the transaction is reached by a majority consensus in a blockchain, and the blocks where the information is stored are sealed. Cryptographic techniques link together the blocks where previous block information is recorded in each subsequent block. This makes the blocks nearly impossible to alter once they are confirmed enough times.
If a hacker or a group gains access to more than 50% of the mining process (which is the validation process), they can create a “Fork” i.e. a second version of the blockchain where certain transactions might not be recorded or changes might be made to the protocol.
Hackers can designate the Fork as the true blockchain and double-spend cryptocurrencies there.
Insufficient Security of Exchanges
If the security protocols surrounding an exchange are weak, it can open doors for hackers to get easy access to data and steal resources worth a huge amount of money.
In September 2020, Kucoin was targeted, and hackers managed to loot over $281m worth of coins and tokens.
Security glitches or errors during the creation of a Smart Contract can sometimes happen. When this occurs, hackers can identify the vulnerabilities and attempt an attack. Hackers can misuse some security vulnerabilities in smart contracts to execute transactions illegally and steal money.
Some Major Cryptocurrency Hacks
|On March 29th, 2022, it was discovered that the Ronin network had had a massive security breach. Ronin runs “The Ronin Bridge”, which links the popular P2E game Axie Infinity to the Ethereum mainnet. The theft of 25.5 million USD and 173,600 Ether occurred as a result of this incident, which was caused due to hackers taking advantage of relaxed security which was in effect since early November as a step to cope with the high demand when Axie’s user base had risen to an unsustainable amount. These relaxations were left unchecked and resulted in the hack. This made the Ronin Bridge hack one of the biggest ever, with a value equivalent to approximately USD 600 million.|
|Poly Network||The Poly Network exploit was an attack on Poly’s Smart Contract by anonymous hackers on August 10, 2021. Over $610 million of digital tokens were transferred to hacker wallets. As per cybersecurity firm SlowMist, the heist occurred due to mismanagement of access rights between two Poly smart contracts EthCrossChainManager and EthCrossChainData. All assets were returned to Poly Network over the following 15 days. It was one of the largest security incidents in DeFi‘s history in terms of mark-to-market value.|
|Coincheck||On January 26, 2018, 58 billion yen ($530 million) worth of the cryptocurrency NEM, was stolen from the Coincheck Exchange. The hackers broke into Coincheck and hacked the exchange by infecting a terminal in the company with malware which was further used to steal the private keys of NEM, which resulted in almost $530 million worth of NEM being stolen and sent to the hacker’s address.|
Although blockchain technology is very secure and acts as an impeccable digital ledger for transactions, just like every other technology in the world, it is not unbreachable and vulnerable to the crypto heist.
Hackers can identify loopholes in the system and use them to hack and steal huge sums of digital assets that can result in massive wealth disappearance from the user’s wallets.
The presence of multiple and ever-increasing cases of hacks occurring with the development of the DeFi and crypto space is proof that even blockchain technology, despite its numerous merits, has limitations.
These limitations can often prove to be fatal and users should exercise caution, especially while trading on exchanges because Blockchain which was once hailed as “Unbreachable” is not immune to the malicious intents of hackers.