Cryptocurrency–The National Police Agency of Japan has released troubling news on the state of cryptocurrency-related thievery. Despite growing adoption and awareness for the industry throughout 2018, thereby leading to an improvement in security for user funds, the Japanese organization reports crypto-related thefts have cost users more than half a billion dollars.
In a report published on Thursday, the National Agency detailed how cryptocurrency hacks and thefts tripled throughout the first six months of the year, with the total amount of capital stolen being estimated at $540 million. To put that figure into perspective, at the current market capitalization of $200 billion, 0.27 percent of the entire valuation of cryptocurrency has been affected by digital theivery through the first half of the year.
Despite cryptocurrency providing a more secure means of storage for digital money and assets compared to traditional fiat or hard currency, lack of education over best practices for proper storage in addition to users who rely upon exchanges to keep their funds safe have led to the staggering numbers of crypto-related theft. Compared to crypto thefts in 2017, the agency reports a massive increase in the total valuation of coins stolen, up from $5.91 throughout the entirety of last year to the over half-billion in the first half of 2018. In part, the substantial increase in valuation for thefts was related to the rising price of cryptocurrency throughout 2017 and into the first half of this year, with most altcoins experienced percentage gains in the hundreds, if not thousands, over that timeframe leading to greater amounts of capital being taken in similar hacks compared to previous years.
In addition, the high profile nature of cryptocurrency and the emphasis on increased valuation for the tokens undoubtedly has led to more bad actors attempting to capitalize on the space–particularly when many within the industry are not well-verse on the technology or particularly methods to increase the security of their funds. Exchange-based hacks have also become the unfortunate norm for the industry, with the massive collection of funds sitting on exchanges being at the mercy of the administrators and teams tasked with keeping them secure. Mt. Gox constituted a high profile hack as far back as 2014, with total funds stolen amounting to $473 million at the time. Recent exchanges hacks have come close to matching the staggering amount of capital taken through Mt. Gox, despite functioning on a much larger scale. BitGrail, one of the few exchanges to offer Raiblocks (since rebranded to NANO), was caught in the middle of a controversial and high profile hack that constituted $187 million in stolen coins at the time it occurred in February.
However, as reported by the Japanese agency, Coincheck’s record breaking hack worth $520 million in stolen user NEM constituted the majority of total amount of taken funds. Individual hacks of user accounts made up a significant portion of the total, with an estimated $22 million stolen crypto coming from such cases. In addition, 60 percent of individual hacked accounts resulted from situations where individuals used the same password across email and exchange accounts, constituting poor security practices.