Since you have to consolidate over 50% of the total hash rate in order to hack a cryptocurrency, only smaller coins were on the receiving end of a successful 51% attack. Bitcoin Gold (BTG), Ethereum Classic (ETC), and Bitcoin Satoshi Vision (BSV) are among the most well-known examples.
With Big Money Comes Big Risk: Can Bitcoin Be Hacked?
16 Feb, 2023
When there is an opportunity to make money, there will be interest. The more money that is made through cryptocurrency trading, the more fintech startups with a crypto focus will attract funds. Over the last few years, it really seemed like crypto was the fastest way to get rich. Of course, if there’s ever a promise of getting rich quickly, there will be people ready to exploit the possibility.
Almost every investor or trader has encountered scammers, hackers, and thieves, either directly or indirectly. Today, we are going to find out if those people are an actual threat to your assets. We will also learn about ways to make sure your crypto stays safe.
Safety of Blockchain Systems: How Can Crypto Be Hacked?
The first step to finding out how crypto can be hacked is understanding how blockchain technology operates and how it safeguards user funds. There’s a concept in crypto called the “blockchain trilemma.” It refers to the fact that it is very hard (if not impossible) for a blockchain to simultaneously reach optimal levels of three key factors – scalability, security, and decentralization.
Most cryptos, blockchain-powered apps, and NFTs choose security and decentralization. They boast top-of-the-line security features that ensure that once blocks have been added to the chain database, they cannot be tampered with, altered, reversed, or hacked. To put it bluntly, while blockchains are almost perfectly secured, there have been instances in the past when hackers managed to take advantage of security shortcomings.
51% Attack on Blockchain
So, how can cryptocurrency be hacked? There is a possibility that an attacker or a group of attackers gain control over a blockchain by consolidating its computational power (hash rate). If the malicious actors control more than 50% of the hash rate, they can introduce a modified blockchain, completing the so-called 51% attack. This enables them to make adjustments to transactions yet to be confirmed before they unleash their attack.
How can Bitcoins be hacked after such actions? Well, let’s imagine a scenario where you decide to send 2 BTC to a friend. Before the transaction is confirmed six times, it is fair game to the hackers. They can easily reverse the transaction to steal the tokens. They will be transferred to a different address, and the adjusted blockchain will make it difficult to trace your funds.
We recently did a more detailed analysis of the 51% attack and the theory behind it, so click this Exolix blog link HERE to read about it. If you don’t want to read the entire blog post, the short story is that it is borderline impossible to hack bigger cryptos. So, if you are wondering something along the lines of “Can Bitcoin blockchain be hacked in a 51% attack?” the answer is “no.” There is a possibility, but it is minuscule. Even in theory, it is almost impossible to take over at least 50% of the BTC hash rate.
Main Types of Crypto Hacks
Brace yourself for a shocking revelation – not only can cryptos be hacked, but there are multiple ways this can happen. Let’s examine the main types of hacks that have occurred in the past:
Wallet hacks. Crypto wallets contain the keys to your crypto. Most people choose mobile/web apps to store their keys, and the sad thing is that apps get hacked all the time. We strongly advise you to stick to cold (offline) wallets.
Exchange hacks. Why wonder, “Can cryptocurrencies be hacked?” when entire exchanges can be hacked? Since these kinds of platforms have robust reverses to ensure solvency, they are a very tempting target for hackers. If you do not store your keys on a specific site, then you are totally safe from this type of attack.
Bridge hacks. In crypto, a bridge is something that helps traders convert their crypto funds from one blockchain to another. Similarly to exchanges, bridges are attractive because they hold plenty of funds at any given point in time. A good example of a bridge hack was when Harmony’s Horizon Bridge was exploited for $100 million.
Ways to Protect Your Crypto Assets
A crucial way to protect your funds is by using cold wallets. You have to understand that aside from the very unlikely 51% attack, the only real way your money can get stolen is if your keys are compromised. Take extra steps to keep them safe by choosing non-custodial cold wallets.
While Bitcoin can be hacked theoretically, it is safer for you to stick to the better-known cryptos. Smaller projects are more vulnerable to the above-mentioned attacks and are more likely to attract hacker attention in general.
In addition to using cold wallets and choosing BTC or other top cryptos, you should also swap your current exchange for a safer one. At the time of writing, these are the most secure options:
Notice how we didn’t include Exolix in the list? That would have been highly unprofessional! Even though our site is indeed safe and can hang with the best of them.
Frequently Asked Questions
If you understand how cryptocurrency can be hacked through a 51% attack, you will know that the more popular it is, the harder it is to hack it. So, Bitcoin (BTC) is your best bet when it comes to unhackable cryptos.
For the most part, they are. Exchange sites that value their reputation constantly put hefty amounts of money and effort into developing defenses. Do your due diligence while selecting the site that you will trust with your money. By the way, many people confuse exchange hacks with crypto hacks, so be sure to separate those terms.