Cryptocurrency And The Risk of Getting Hacked
One of the largest of these scams happened to a startup called CoinDash, which lost $7 million dollars during its ICO when a hacker changed the address that investors would send their money to. This summer, three initial coin offerings have been hacked for a total amount of $30 million dollars. With the boom of cryptocurrencies currently leading the charts, how will this security flaw change the market?
In the beginning of 2013, ICOs have gone in the same way that traditional IPOs would raise money. This is done through crowdfunding. A majority of the companies involved in these ICOs chose that route for reasons such as not being able to get traditional investment firms to fund them.
Many are choosing to invest because of the high potential for equally high returns, however because the market is unregulated, it cannot be accounted for to completely lose the idea of fraud. The point behind these cryptocurrencies is to keep everything mostly unregulated which can lead to a general sketchy feeling when investing.
Jackson Palmer, a product manager at Adobe who co-created the Dogecoin cryptocurrency stated that “These ICOs have big targets on their back. It wouldn’t surprise me if attackers have spreadsheets of what ICOs are coming up and how much they’re planning to raise. ICOs opened funding to a much less experienced group of people who don’t necessarily know how to execute on good infosec practices. And the investors are very inexperienced as well. It’s the perfect storm for people to lose money.”
Hopefully the fraud and security issue will not stop the cryptocurrency market from continuing its boom.