What Has Happened?
Of late, there have been a couple of major attacks on Blockchain which have seen a large bug in the Cryptocurrency operating procedures exposed and subsequently hacked. Luckily it has not happened a lot but when it has, the impact has been rather large to say the very least.
These attacks have occurred when either an individual miner or a group of miners has taken control of 51% of the computing power of a network (ie over half). As highlighted above, this has only happened twice but on both occasions on the same Blockchain and Cryptocurrency.
The Company Attacked
The company affected by this 51% hack is Verge, a Cryptocurrency that is privacy-orientated. Sadly, the company’s specific cryptocurrency – XVG – lost millions of dollars due to the hack.
The first attack occurred in April 2018. Only a minimal amount of 250,000 XVG was stolen in this instance, however, a month later, another massive $1.7 million-worth of XVG was taken from the company using the same concept. A massive blow for Verge.
How It Happened
As with most exposures, code has simply been changed in an upgrade or for whatever reason and the outcomes of these changes are not fully appreciated until holes or bugs are found somewhere down the line.
In this case, these changes came about when the company was simply improving the payments process. However, the huge implications of those small changes are clear to see by all. Industry experts have stated that the changes made by the developers were very naive, clumsy and should not have been made in the first place. Others have suggested that the hacker should be commended for finding a way to steal such a large amount of the cryptocurrency and exposing how insecure the coding was. It is obvious that lessons have certainly be learned.
What has just happened with Verge is certainly a massive learning curve not just for the company but for the whole cryptocurrency industry. As is so often the case with this market, it only takes one small mistake leading to one very large fraudulent activity for the whole industry to take note. Industry insiders suggest that there are several more attacks expected. It is thought that there are many other developers that have also been lazy in their coding and taken shortcuts. More problems are therefore possible in the future just as soon as hackers start exploiting less than perfect code. The experts are urging changes to Blockchain to be thoroughly tested before being released to ensure attacks are kept to a minimum.
As has been highlighted so many times before, the speed of the development in this industry is so fast that standard operating procedures and the normal processes that are followed in business are being left behind. This is just so that those involved in this market can keep up with the changes required to ensure the industry grows and innovation continues. Until such times that protocols and business practices are put in place, issues such as this are going to continue to happen.