While cryptocurrencies like Bitcoin and Ethereum have enjoyed meteoric popularity over the past several months, there are still many potential investors who remain skeptical. And one of the reasons for this skepticism is the ongoing concern about cryptocurrency security. Now that a second major hack of Ethereum has taken place within the span of one week, those concerns may have more traction, although it certainly hasn't stopped many investors from shifting their attention to the digital money space.
Two High-Profile Hacks in Three Days
Ethereum suffered major losses because of two separate hacking incidents that occurred within three days of each other last week, according to a report by PC Gamer.
The second of the two robberies was the more substantial. It exploited a vulnerability in Parity, the digital wallet service popular among many Ethereum miners. Hackers stole about 153,000 Ether, the network's native currency, with a value of about $34 million. The hackers stole this sum from three different multi-signature Ethereum wallets.
Gavin Wood, founder of Parity, issued a critical security notice in response to the hacking event. "A vulnerability in Parity Wallet's variant of the standard multi-sig contract has been found," he explained.
Wood then urged all Parity users to "immediately move assets contained in the multi-sig wallet to a secure address." Simultaneously, hackers working to defend the network siphoned more than 377,000 additional Ether tokens to a safe space. The White Hat Group explained its actions in a post on Reddit, saying it would re-issue the funds back to owners once the vulnerability could be properly addressed.
CoinDash Exposes Another Entry Point for Hackers
The other hacking event, which occurred last week, exposes another point of concern with regard to crypto security. Hackers stole about $10.3 million in Ether from CoinDash, a popular exchange. In this case, the robbers may have simply replaced wallet addresses with a simple hack.
And yet, in spite of these and a number of other prominent thefts in recent months, cryptocurrencies seem to be showing no signs of slowing down in terms of growth.
The largest currencies, Bitcoin and Ethereum, have appreciated 178% and 2,569%, respectively, so far in 2017, and the overall user base of cryptocurrencies worldwide is expanding at a significant pace. It could be that the risk of hacking and theft is simply not great enough in the minds of potential investors to convince them to stay away from a potentially lucrative investment.
PC Gamer suggests that the downfall of cryptocurrencies, if there is one at any time in the future, would more likely be because of a drop in the values of those currencies than due to concerns over possible theft of assets. (See also: Criminals Are Too Stupid to Use Cryptocurrency: EU Report.)