Blockchain is a fantastic bit of software technology that has changed our world. It, not only lead to the birth of cryptocurrency but is also being applied to other areas, such as accounting. Before I get into why cryptocurrency is getting hacked I need to explain a bit about why blockchain is so secure.
Blockchain Technology
Blockchain is a digital ledger that records all the transactions that took place beforehand. This ledger is recorded chronologically and made public. When a transaction takes place person A sends the coin to person B, then the blockchain records that the transaction took place. The transaction is then sent on to other nodes to acknowledge this change. If someone tried to alter blockchain information other nodes would disagree with the clashing record, and the record would change back.
How are hacks taking place then?
It is rarely actually the blockchain that is being attacked, but the weak points are at either end of the transaction. Exchanges are commonly the targets for hackers. Just this year (2018) 731 million dollars have been stolen from exchanges. By hacking into the wallets of exchanges, hackers can make off with millions of dollars. Often these hacks are due to lack of security or poor management. Exchanges are starting to switch most of their wallets over to "cold wallets," which is to say they're offline so hackers can't access them. Exchanges getting hacked is very similar to any business or a bank getting hacked or attacked. However, cryptocurrency is still very new and hackers are targeting it because there is money to be made. But, security is getting better for exchanges as well. Bithumb (an exchange) spends 9 million dollars annually on security. With new technology coming out to help the exchanges in this battle, hopefully, soon exchange's security will match that of blockchain technology. With all the hacks in the news, people worry about the security of cryptocurrency and that of blockchain. However, it is not there that lies the problem but in the exchanges and wallets where people are storing their coins. Research the exchanges you want to use, make sure their security is the best it can be.
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