Bithumb heist highlights ever-present cryptocurrencies danger

The security of Bitcoin et al has been thrown into the spotlight after the South Korean cryptocurrency exchange Bithumb said 35bn won ($31.5m) worth of virtual coins were stolen by hackers.

Senior IEEE Member and Professor of Cybersecurity at Ulster University, Dr Kevin Curran, warns that consumers are unlikely to have stolen cryptocurrency returned to them. “Unlike traditional banking mechanisms, blockchain currencies can be stolen and moved to thieves’ accounts with no means of recovery. Nothing can bring it back,” he comments. “This is a real and ever-present danger with cryptocurrencies and there have been ever-increasing incidents of coins being stolen, as seen recently.”

He adds: “Due to their value, hackers are of course seeking out cryptocurrencies. If they do find your cryptocurrency wallet or hack online crypto exchanges and transfer the coins, then it is basically gone forever. It is not that we cannot see which ‘wallet’ these ‘coins’ have been transferred into but rather that the stolen tokens can be transformed into ‘fresh’ tokens by using ‘mixing services’, which create new untraceable tokens.”

Ultimately, it should be remembered that the European Banking Authority and others have warned Bitcoin users are not protected by refund rights or chargebacks. Many people, however, believe the risks outweigh the benefits. “Buying, selling and storing of Bitcoin is beyond what we can reasonably expect the public to understand but as with most technologies, it is expected cryptocurrency will become more user friendly over time,” Dr Curran concludes.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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