Beware of crypto-exchanges as large scale hacks are on the rise

Judging by the comments and views we get on crypto-currency articles and social media intelligence, Zimbabwe does have a very thriving and vibrant cryptocurrency community. A lot of these people use various wallets to store their digital assets and most of these wallets are provided and managed by so-called exchanges.

Exchanges make things easy

As pointed out it seems most people use wallets provided by crypto exchanges. These wallets make things easy compared to the traditional way of doing things. They handle and abstract over some of the overhead and cumbersome details you would otherwise have to deal with if you were manually managing your own wallet.

As the name suggests crypto-currencies are based on cryptography. That to the initiated means, there is a whole lot of Maths involved and if you laboured over logarithms and simultaneous equations in Form 3 and New General Mathematics was not your favourite book you need not bother to understand the underlying gobbledegook.

In the old days dealing in cryptos was a lot like dealing with GNU keys or using Linux. You had to manually meddle with wallets and make sure your keys were safe. A lot of Bitcoin worth hundreds of millions out there is actually lost because the owners can no longer move it because they lost the necessary keys.

That’s one reason why exchange wallets are so popular. All you need to do is click a few buttons enter a few details and you get a wallet address you can give out to people. They use their own wallets and exchanges to send you the Bitcoin and like magic, it arrives. This abstraction however is proving dangerous and downright catastrophic to a lot of people.

Exchange crypto-heists are on the rise

There were times when noobs would lose the coins in their wallets but generally these kinds of small heists are not worthwhile anymore. Hackers now have bigger targets on their sites. Crypto exchanges often have hundreds of millions in crypto-assets within their clutches. They are thus lucrative targets for sophisticated hackers who are now hitting them with alarming regularity.

Consider the most recent heists and the amounts involved:

• This month a staggering $600 million was stolen from Poly network. The kind hacker returned all the money fortunately.
• Sometimes its not even a hack, the owners of the network might just decided to lift your crypto and have a payday. Ameer and Raees Cajee from South Africa, the South African brothers as they are now known, took US$3.6 billion of crypto fromt heir hapless victims. That’s the kind of money we present in our annual national budget ladies and gentlemen.
• Liquid Global lost about $100 million of crypto last week
• Then there is the famous original MtGox heist in which $450 million worth of cryto was lost. It’s now worth many times that much in the market these days.
• There were even rumours that local exchange Golix had been hacked or a key/password had been lost.

The short of it all is that when you store your crypto in an exchange given wallet it’s technically like money in the bank. As we probably all learnt the hard way in 2008 and again after that when banks like ZABG, TimeBank and CFX went under-it’s the account holder who suffers.

If you have crypto you want to be safe and have no intention of moving it for a while it’s time you started learning about cold storage and offline wallets. It’s complicated stuff but it can save your hide as far as heists are concerned.