Matthew Hrones, Author at Bitcoinist.com

South Korean Crypto Exchange Bithumb Hacked, $31.5 Million Stolen

Matthew Hrones · June 20, 2018 · 12:30 am ·

Matthew Hrones · June 20, 2018 · 12:30 am

Popular South Korean cryptocurrency exchange Bithumb has suspended all deposits and withdrawals following a hack resulting in the theft of more than $31 million worth of cryptocurrencies. This marks the second Korean exchange hack in as many weeks.

Seoul-based cryptocurrency exchange Bithumb – currently the sixth largest exchange in the world by trade volume – announced shortly before 9 AM local time Wednesday that more than 35 billion won ($31.5 million) worth of cryptocurrencies had been stolen from the platform in an apparent hack. Deposits and withdrawals on the exchange have been halted while they change out their wallet system to address safety and security issues.

[Notice for the temporary suspension of the deposits]
Due to the increasing safety issues, we are changing our wallet system.
Please do not deposit until we notify.
*All deposits are not deposited into your wallet until all changes are completed.
— Bithumb (@BithumbOfficial) June 20, 2018

Although it is not yet known which cryptocurrencies were stolen, Bithumb was quick to assure customers that their funds have been moved to secure cold wallets and that any losses resulting from the theft would be reimbursed from the exchange’s own reserves.

The Cryptocurrency Market Reacts

The cryptocurrency market reacted swiftly to news of the Bithumb hack, with Bitcoin prices and total market cap both down by more than two percent within a half hour of the announcement.

South Korea has been the target of two cryptocurrency exchange hacks in the past two weeks alone. Coinrail, a smaller exchange in the Asian country, was also hacked, resulting in a loss of around $40 million worth of cryptocurrencies.

This is the second hack Bithumb has suffered in less than a year. In July of last year, an employee computer was compromised, leading to “tens of millions” of won being stolen.

Charlie Lee weighed in on the hack on Twitter:

Another day, another hack. Hopefully BitThumb is able to cover this amount, though $30MM is not a small amount.
As I've said many times, be smart and only keep on exchange coins that you are actively trading. It's best to withdraw right after trading. https://t.co/8YpVcHx8tK
— Charlie Lee [LTC⚡] (@SatoshiLite) June 20, 2018

Thousands – if not millions – of cryptocurrency users store their funds in third-party custodial wallets, and this hack serves as a reminder to everyone of how important it is to store your coins in a wallet you control. Otherwise, you’re relying on a third party to keep your funds safe. As cryptocurrency prices increase, exchanges will no doubt find themselves increasingly targeted by hackers looking for an easy score.

Thankfully, Bithumb has the means and the willingness to compensate its customers for their losses, but such is not always the case. This should serve as yet another cautionary tale of why exchanges need to go to greater lengths to ensure the integrity of their systems and the safety of user funds.

What are your thoughts on the recent spate of exchange hacks? How will this affect the cryptocurrency market, given that Bithumb intends to reimburse its customers? Let us know in the comments below.

Images courtesy of Shutterstock

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When Moon(ero): The Mystery of Monero’s Declining Price

Matthew Hrones · June 16, 2018 · 3:00 am ·

Matthew Hrones · June 16, 2018 · 3:00 am

The popular privacy coin has been one of the worst performers in the past month, especially since the pullback in early May. It has been steadily dropping in BTC value since late April, and it raises the question, why?

Privacy Isn’t Selling, Apparently

Monero is a staple in the cryptocurrency community, where most people involved in the space have, at the very least, a modicum of respect for the project. The network offers completely private transactions along with full fungibility of all the coins in circulation. Monero has seen some exciting developments over the past few months, but it doesn’t seem to have given investors much of a return.

The April pullback brought many coins back up in price, but it didn’t seem to effect Monero as much as others. Monero went from a low of $165 to a high of just around $290. Other altcoins had much more impressive numbers, however. Ethereum and Bitcoin Cash, for example, more than doubled their respective values in the same period.

What’s Been Going on with Monero?

The question confounding market analysts is, “Why?” Monero has taken some impressive steps in terms of adoption and tech, yet the price does not seem to reflect this at all.

At the end of May, Monero’s lead developer Riccardo “fluffypony” Spagni announced that he was planning on moving away from many leadership roles in the community. Usually, when someone in a leadership position exits, it raises questions about the future of the project. Some investors could look at an early warning sign of problems ahead. However, Spagni doesn’t plan on leaving the community altogether

I will always be an advocate for privacy, and for monero, a part of the monero community, but my actual responsibilities by definition need to be reduced.

Monero has been GPU minable since its inception as no ASICs were available on the market. Earlier this year, mining hardware manufacture Bitmain announced the Antminer x3, a CryptoNight mining ASIC. These ASICs worked for the same algorithm used on the Monero network.

On top of this, many believed a great deal of hashrate was coming from botnets – hacked computers that use their processing power to mine for the hacker.

Monero performs routine network upgrades via hardfork every six months, and the threats of ASICs and botnets raised some big concerns in the community. To counter the threat, the developers added a small tweak to the Monero mining algorithm to the April upgrade. Since ASICs are specialized to mine only one specific algorithm, the tweak would effectively brick any ASICs in existence.

It would also deal with the pesky possibility of botnets as the hacker can’t push an update to all infected computers to tell them to mine on the new chain. Monero has always been a target for hackers trying to mine on other people’s computers, as the network is completely private.

Monero launched their v0.12 software and the upgrade went beautifully. The hash rate before the fork was sitting at around 1000 MH/sec and dropped to over half that to 460 MH/sec once normal miners updated their rigs. This means at the time of the fork, over half the network was mining via botnets or ASICs.

Monero also saw Ledger Nano S integration earlier this month, a huge step for the fungible cryptocurrency. Via the latest Monero client, users can store their hard-earned XMR on a secure hardware wallet. It is expected that we will see Ledger release a Monero app, Ledger integration into the Monero GUI, or a third party client for connecting to Ledger in the near future.

Should We Be Worried About Botnets?

An interesting study found that the botnet fears may not be as well founded as we have been led to believe. Palo Alto Networks researchers studying crypto mining malware found that in roughly 630,000 code samples, Monero was being mined around 84 percent of the time. They were able to extract more than 2300 Monero wallet IDs which they then cross-matched to the mining pools used by the malware.

The researchers discovered that approximately 800,000 XMR had been mined via these botnets, but very few of the wallets had any significant amount of funds. Out of all of the wallets analyzed, it was found that:

55% of the wallets collected 0.01 XMR or more.
244 wallets collected 100 XMR or more.
99 wallets collected 1000 XMR or more.
16 wallets collected 10,000 XMR or more.

While those numbers seem shocking, that 800,000 XMR only accounts for 5% of all XMR minted on the network. Many would expect botnets to have a much more meaningful impact on the network.

Monero also has some exciting things coming up on their roadmap. Next, the team is set to release the new Monero GUI to compliment the client release. Later this year, we’ll see another network upgrade that will hopefully add bulletproofs, cutting Monero’s transaction size, and in turn fees, by around 80%. Bulletproofs are currently being audited by third-party firms, and the costs of the audit were fully funded by the community.

Do you own Monero? What do you think about the privacy coin’s slightly stunted price? Are you buying the dip? Let us know in the comments below!

Images courtesy of CoinMarketCap, Shutterstock, AdobeStock

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