Bitcoin Wallet Services Are A Major Risk of Hacks And Thefts; Time to Tightening Security

Over the past few years, the Bitcoin community has witnessed the hacking of several exchanges and custodial services. Japanese crypto exchange, Mt. Gox, which lost over $450 million, remains the most reminiscent case in the field to date, despite happening over six years ago. Since, the field has seen smaller hacks and thefts recorded, Korean crypto exchange Upbit, for instance, losing close to $55 million in stolen Ethereum in November last year.

Leo Wandersleb, CEO of Wallet Scrutiny, appeared on Bitcoin & Co. podcast speaking on the challenges that face exchanges in security. Furthermore, Leo stated that wallets may also be vulnerable to attacks as the security concerns increase.

“What happened with Mt. Gox. and also with other smaller wallets where hundreds of millions of dollars were lost and never to be recovered and I think something like that will also happen in the wallet space.”

Despite the number of cases reducing, there remains a black spot on the general security measures employed by the exchanges and custodial services. Leo Wandersleb, addressed the issue on the show calling on every platform to close out the backdoors that makes the system vulnerable. Leo said,

“The goal is to avoid exit scans and to a avoid major flaws that would make all the users of a certain wallet vulnerable to some backdoors that get injected by the provider or by somebody who has the means to add her attack through maybe some libraries that are used in that wallet, etc.”

Despite the progress made in custodial security, current unsolved faults have kept a number of institutional investors from engaging in the field. Most of these investors prefer holding Bitcoin derivatives rather than the actual BTC as seen with the spiking volumes on institutional platforms, CME futures and Intercontinental Exchange’s Bakkt, over the past year.

While Bitcoin’s privacy is held on as a personal responsibility, not many investors want to take the risks and third party wallets are taking up the bulk to provide the security of users’ assets. Wandersleb’s Wallet Scrutiny aims to make sure that each wallet does follow the security procedures to keep their customers’ wallets safe and secure.

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Author: Lujan Odera

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