Most people describe Bitcoin as a cryptocurrency or virtual currency that uses a decentralized network to connect users. Thus, Bitcoin is not subject to national governments’ or central banks’ whims. Currently, the world has many cryptocurrencies in circulation, but Bitcoin is the most used and popular digital currency.
Political independence and anonymity protection are the primary strengths of this cryptocurrency. However, they also make Bitcoin attractive to fraudsters and thieves. Bitcoin has a grey area in some jurisdictions. That means local law enforcers do not give Bitcoin theft prevention priority. But this doesn’t deter people from using Bitcoin. Today, people use online platforms like Bitcoin Era to trade this cryptocurrency. Such platforms allow people to access, purchase, and sell Bitcoin. Ideally, people use crypto exchanges to trade Bitcoin using fiat money. Over recent years, some people have lost money to fraudsters when they hack crypto exchanges and transfer their Bitcoin.
Stealing Bitcoin requires more knowledge and technical skills than stealing fiat cash. In most cases, sophisticated hacker attacks have been part of Bitcoin heists. Thus, rogue exchange workers or accomplished outsiders play a role in these attacks. Here are some of the methods that thieves use to steal Bitcoin.
Private Keys Theft
Some people store private keys in digital repositories like cloud drives and exchanges. Unfortunately, this increases their hacking and theft vulnerability. Once thieves have acquired the private keys, they can use them to access and even transfer Bitcoin holdings. Thus, the rightful Bitcoin owners lose their funds to the hackers.
Wallet Vulnerability Exploitation
Security flaws can make a Bitcoin wallet vulnerable to theft through hack attacks. In some cases, service providers keep private keys inside virtual wallets to enhance convenience. Unfortunately, hackers can exploit a wallet’s vulnerability to steal both the access and funds in a single fell swoop.
Fraudulent Investment Funds and Exchanges
Some companies that purport to deal in Bitcoin seem legit. However, they are fronts that thieves use to commit financial crimes. Some of these companies promise oversized returns to attract investors. Unfortunately, these are schemes that lead to severe losses for the investors. The Ponzi scheme, for instance, led to losses of up to $4.5 million for investors.
Direct Legit Exchange Attacks
Crypto exchanges attract thousands of Bitcoin users every year. What’s more, people store millions of their hard-earned dollars on these platforms. For this reason, thieves target them more often. Hackers can steal Bitcoin from the wallets of legit crypto exchanges. They can also steam money from the wallets of crypto exchange users. Many traders store Bitcoin in crypto exchanges to enhance convenience. Unfortunately, hackers can target a legit crypto exchange and get away with the money in the users’ accounts.
Dark Web Market Attacks
The dark web market and Bitcoin exchanges have similar vulnerabilities. For instance, the Mt. Gox was another Bitcoin heist that affected the dark marketplace known as the Sheep Marketplace. This hack led to losses of around $100 million, based on the exchange rates of that time.
Final Thoughts
Security issues around Bitcoin are some of the most considerable drawbacks of this cryptocurrency. Investors and traders should consider these issues before spending their hard- earned money on this virtual currency. Duplicating Bitcoin units is almost impossible. However, this doesn’t mean that Bitcoin users can’t be victims of fraud or theft. The Bitcoin system has weak points and imperfections that sophisticated hackers can exploit. And this explains incidents like the Ponzi scheme and Mt.Gox that led to losses amounting to millions of U.S dollars.
What’s more, some incidents go unpublished, but people lose a lot of money when they occur. Bitcoin exchanges are most vulnerable to theft because hackers target them more often. Therefore, choose your crypto exchange carefully before you start trading this digital currency.
