So Blockchains are unhackable, right? Turns out – not always

Hackers have stolen nearly $2bn worth of cryptocurrency since the beginning of 2017 – the figure may be higher, that’s just what’s been publicly revealed.

And that means, warns an in-depth piece in MIT Technology Review, that, “Marketing slogans and headlines that called the technology ‘unhackable’ were dead wrong.”

What could be even worse was that the $2bn wasn’t stolen just be lone elements, but sophisticated cybercrime organisations are now probing for cryptocurrency weaknesses, too – with the article, ‘Once hailed as unhackable, blockchains are now getting hacked‘, quoting analytics firm Chainalysis that just two such groups, both of which are apparently still active, may have stolen a combined $1bn between them from cryptocurrency exchanges.

It also turns out that the hacks are down to the very way Blockchain is constructed, claims the article – “We’ve long known that just as Blockchains have unique security features, they have unique vulnerabilities” and that “the more complex a blockchain system is, the more ways there are to make mistakes while setting it up”.

The author, site associate editor Mike Orcutt, is careful to note that up until now, most break-ins were occurring at the websites where people can buy, trade, and hold cryptocurrencies – exchanges – and so the vulnerability could be put down to poor security practices at that end of the Blockchain process.

However, the increasing success of the so-called ‘51% attack’ – where a third party gains control of more than half of the network’s computing power and was using it to rewrite the currency’s transaction history – but also the rise in the use of ‘smart-contract bugs’ as another way in – shows a very worrying trend emerging that can’t just be put down to human error, the piece contends.

“While blockchain technology has been long touted for its security, under certain conditions it can  be quite vulnerable,” the article concludes.

“Sometimes shoddy execution can be blamed, or unintentional software bugs. Other times it’s more of a grey area—the complicated result of interactions between the code, the economics of the blockchain, and human greed. That’s been known in theory since the technology’s beginning.

“Now that so many blockchains are out in the world, we are learning what it actually means—often the hard way.”