The Wildcat Voice

Hackers Make Off With Forty-Five Billion Yen From Cryptocurrency Trade

Bennett Meacham, Staff Writer

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Since the advent of computers and the internet, developers have fought against the dangers of hacking. Cryptocurrency is designed to be a challenge for hackers, but a recent hack on the Japanese cryptocurrency exchange–known as Coincheck–is a sizeable one. In the hack, Coincheck traders lost almost 45 billion yen, or about 400 million U.S. dollars.

Cryptocurrency, or crypto, is a type of currency that is not backed by a government or intrinsic value of a resource; it is just a number stored on a computer. There are two ways to make money off of crypto: mining and investing. Cryptocurrency is awarded to people who “mine” it. Mining is when someone sends out a problem and people try to solve it. The first person to solve it is rewarded with a bit of cryptocurrency. As more problems are solved, the system is strengthened, as is the difficulty of the problems, making them require more powerful hardware.

Currently, Bitcoin difficulty is in the trillions (about 2.5 trillion as of February, 2018), so in order to mine Bitcoin, one must have very powerful hardware.

When investing in crypto, it acts like a stock. One buys it, and, if the price goes up, then it can be resold for more money than it was bought for.

NEM is a cryptocurrency that seeks to keep from needing big hardware to be mineable. It makes it easier for people to start mining, rather than the system’s additions being those already making profit investing in more powerful computer hardware.

Coincheck is not a cryptocurrency, but a way for storing and moving it. Just like a bank stores money and handles transactions with traditional currency, services like Coincheck store crypto and handle transactions as well. Coincheck provides a way for miners to see how much they have mined, and for people who trade crypto to check how much they have and the current price of what they are trading so that they know whether they should buy or sell.

Recently, Coincheck was hacked. Forty-five billion yen was moved to a hot account, an account that is stored on the internet and is less secure (while cold storage is more secure, being offline) that Coincheck uses to store a lot of its cryptocurrency. Hackers were able to break through the encryption and steal the crypto. Putting this much money into one account is not secure, especially if it is hot; it makes it easy for the money to be lost.

“Centralization of resources–I think of it as a big carrot dangling in front of criminals,” Charles Bovaird, a financial writer and consultant, states. NEM has tracked the addresses with the stolen money and has attempted to warn traders against engaging with those accounts.

Coincheck admitted to the hack and has stated that it will partially reimburse most of its users. The FSA (Financial Services Agencies of Japan) has demanded that Coincheck take preventative measures from hackings in the future.

Not all cryptocurrency is unsafe, as most crypto is stored in cold accounts, Coincheck being the exception. Most is safe for now, but these heists could mean new things for cryptocurrencies and hacking.

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Hackers Make Off With Forty-Five Billion Yen From Cryptocurrency Trade