There are many points of concerns for cryptocurrency investors from market volatility to the possibility of having a crypto bubble. But other than these two factors, crypto investors are also vulnerable to losing their money from hacks.
It isn’t the first time that some exchange has been hacked. In 2014, Mt Gox hack resulted in the loss of Bitcoin valued initially at $470 million. The value of the stolen cryptocurrency later dropped to around $400 million following the revelation.
The most recent hack has outranked other cryptocurrency exchange hacks that we’ve seen so far. Japanese cryptocurrency exchange Coincheck has lost around $524 million worth of digital coins. Reported on Japanese newspaper Asahi Shimbun, Coincheck was said to have lost around 500 million units of NEM, a digital currency that is around worth 58 billion yen at the time that it was stolen from its customers’ wallets.
Security Concerns Warding Off Potential Investors?
Security flaw including hacks has been a major concern for many investors in the crypto world. In fact, it wasn’t surprising how Bitcoin price initially dropped by 7% after the hack was reported. However, it was clear that many are actually interested in buying when prices are down. And with this, Bitcoin’s price stabilized at $11,048.2 as of writing this article.
The same is true for both Ethereum and Ripple. Ethereum dropped by 5% while Ripple, on the other hand, dipped by 12%. However, both altcoins also bounced back. Ethereum is now at $1062.93 while Ripple is at $1.20 as of the moment.
Closer Look at the NEM Hack
NEM is the tenth-largest cryptocurrency based on market capitalization. In a report made by the exchange, the hackers were able to steal the private key used for the hot wallet where the NEM digital coins have been stored. And with this, they were able to drain the funds.
The funds stolen were from the customers of the said exchange. The “inappropriate” movement of funds was reported by Coincheck to both the Financial Services Agency and the police on that same day.
As a reaction to the breach in security, the exchange then announced to halt all withdrawals coming from the site in order to control the damage and to stop further draining of funds. The exchange was then asked if they are going to allow at least fiat currency withdrawals. Coincheck mentioned that they are going to still determine the best way to proceed from this situation.
They have figured out that the funds were simply being stored in a hot wallet than in a wallet that has multisig feature. Coincheck, however, clarifies that each exchange has their own security setup that differs from one another.
Other cryptocurrencies found on the exchange are already stored in mutlisig wallets. However, NEM wasn’t. However, when asked by the media, the company mentioned that “security standards were not low”.
What comes next after this hack? Now that more and more people are involved in cryptocurrencies, it becomes a trickier process when funds are being stolen. This simply calls for improved security features in order to stop hackers from doing damage to investors.