The supply of Bitcoin is limited to 21 million, but it is likely that a large part of it will be lost forever. This situation is caused by a variety of reasons, such as the loss of private keys and obsolete storage devices containing large amounts of Bitcoin (BTC).
When Bitcoin owners do not ignore their wallet passwords, they can sometimes become the target of hackers who want to steal their precious cryptocurrency. Those who use third-party custodial solutions place their Bitcoin wealth at the mercy of the security protocols used by these services.
In fact, various attack vectors have been used to obtain people’s Bitcoin funds. These vulnerabilities range from simple to advanced, targeting all known vulnerabilities inherent in any storage method.
Not your key, not your coin
Cryptocurrency exchanges provide services to millions of customers, and it is reasonable to assume that a large portion of them use these services as the primary custodians of Bitcoin. Under this custody arrangement, the owner of the cryptocurrency does not own the private key of the wallet.
“Not your key, not your coin” is a common chorus in the crypto field, and its basic principle is to warn people about the dangers involved in using external entities to store cryptocurrencies. In fact, as cybercriminals break into the wallets of insecure platforms to steal funds from customers, the cryptocurrency environment is flooded with many stock market hackers.
Sometimes the exchange rebounded from the robbery, and sometimes the platform went bankrupt. mountain. Gox and QuadrigaCX are examples of the latter, as affected customers are still seeking refunds.
Today, the exchange is trying to upgrade its security protocol to avoid violations of security regulations. Unsecured cryptocurrency transactions important in fragile hot wallets are now hindered. Some platforms still make this huge mistake and often pay for it.
Encryption forensics is also evolving, which makes it difficult for cybercriminals to filter their plunder. Overall, there has been a significant reduction in cryptocurrency-related thefts in 2020. According to reports, rogue actors have stolen $3.8 billion from more than 120 attacks in a year. However, the emergence of decentralized exchanges has opened up another way for criminals to launder money.
The decline seen in 2020 has broken the growing trend of cryptocurrency crime over the past four years. However, decentralized financing now seems to have become a new competition arena for cryptocurrency thieves and other rogue participants, and the new market accounts for more than half of the cryptocurrency stolen in 2020.
Not a magic bullet
Regarding the strong security of self-hosted Bitcoin storage, it is important to realize that there is no magic bullet. In fact, Robin Merry, CEO of wallet manufacturer NGrave, talked about this, telling Cointelegraph that BTC owners often torture between choosing to store their currency on low-security exchanges or cold wallets that are usually not easy to use.
In theory, all possible methods of holding BTC have their trade-offs, and some flaws related to any of these systems can be used as entry points for malicious actors.
Take an electrical appliance with vents as an example. On the surface, isolating your computer from the Internet should prevent piracy. However, according to a recent study published by Mordechai Guri, a cyber security researcher at Ben Gurion University of the Negev, it is possible to “generate a covert Wi-Fi signal from an outdoor computer.”
In his research paper, Gorey pointed out that “air-gap networks are not immune to cyber attacks.” In fact, skilled hackers can extract sensitive data from ventilated computers, such as key registry and biometric credentials.
Perhaps most disturbingly, part of the research devoted to a potential method of extracting data from a ventilated computer placed in a Faraday cage is an enclosed enclosure that shields electromagnetic fields. Therefore, bitcoin wallets that rely solely on storage on isolated computers may not be as secure as previously thought. People using this method may need to use interfering devices continuously.
Then there is the hardware wallet, which provides strong security through private keys stored offline. although