As of this writing, cryptocurrency has been in existence for less than 10 years. From its origins as a real-life iteration of the musings of a bunch of IT and cryptography geniuses, cryptocurrency and, more importantly, blockchain technology, sparked an entirely new code of conduct for business practices. Blockchain added a depth and breadth to business operational possibilities that truly changed the world.
Businesses jumped onboard. Industries from fiat financial companies, to transaction-based platforms, to the sharing community, saw what was possible with blockchain technology, and rushed to be a part of the blockchain world. A world where ICOs were funded in minutes and private investors were willing to place money on almost anything backed by a good idea and supported by a proven team.
Unfortunately, hackers jumped onboard too. Despite strong and persistent cypherpunk advocacy of the security and privacy possibilities of a decentralized currency, as quickly as cryptocurrencies came into vogue, individuals with criminal intent found ways to circumvent the blockchain security and illegally profit from other people’s hard work.
Ending before it begins?
It all started with Mt. Gox. Founded in 2010 on the heels of Bitcoin in anticipation of an exponentially growing need, Mt Gox was one of the first cryptocurrency exchanges. They were never without controversy, mostly due to a completely unrealistic growth structure. From hacks to failures, to lawsuits, to regulatory issues, Mt. Gox struggled from the beginning. However, despite these challenges, the exchange continued to grow for over four years, eventually handling over 70% of all Bitcoin transactions.
Mt. Gox growth came to an abrupt halt in 2014 when 850,000 bitcoins, valued at $450 million USD, were stolen from the exchange. The mess has still not reached an effective resolution, and it paved the way for countless future cryptocurrency security breaches.
More recent security breaches resulting in large thefts, totaling $760 million in the first half of 2018, are definitely on the rise.
Coincheck reported the largest known cryptocurrency theft in history in January 2018, with over $520 million NEM coins stolen off their platform from hot wallets. Coincheck is still operational and has even begun a repayment plan, compensating victims of the hack, but the threat origins and instigators are still at large.
Ironically named crypto exchange Coinsecure suffered a $3.4 million USD theft in Q2 of 2018. It was the biggest hack to date of an Indian exchange. The Indian-based cryptocurrency exchange appears ready to return all losses to affected investors. However, there’s a catch, rather than replacing their BTC accounts, the exchange is willing to refund exclusively in Indian rupees. Pending a recovery of the stolen Bitcoin Coinsecure is willing to offer a full refund. However, with the thefts again still unresolved, investors will be compensated in rupees at 90% of their value at the time of the April 9, 2018 theft.
Bitthumb, Bancor, and Bitcoin Gold also suffered crushing security breaches in this year, which is just over halfway over. The cryptocurrency space is looking bleak.
With security issues not only growing but remaining unresolved, a solution needs to be reached. There is now even a Blockchain Graveyard, helpfully recording root cause data on blockchain technology security breach and failure rates. Thankfully, several options have been developed to combat the security threats blockchain platforms constantly face.
Sentinel Protocol, for example, is well on its way to an exciting product release this month within their platform, the Sentinel Portal. The Portal is designed to gather, manage, and report security threats, and there will be two new features on the portal, the Threat Reputation Database (TRDB) and the Uppward Chrome extension.
Sentinel’s robust TRDB will be its strongest tool to date, guaranteeing data integrity through a revolutionary crowdsourcing approach. All threat information, such as fraud, hacking, and security breaches, will be managed within the TRDB. By utilizing the inbuilt components of blockchain technology, Sentinel is creating a system that could bring real-world answers to the crypto-security debacle.
Uppward is a hacking and fraud protection solution for ICO investors. Using the data within Sentinel’s TRDB Uppward will provide security products prior to the implementation of Sentinel’s Machine Learning and Artificial Intelligence features.
The Sentinal project is led by a real-life group of “Sentinels”, comprising a blockchain security team. The Sentinal team of security experts, ethical hackers, and organizational threat managers have been working on this blockchain database of threat data and cyber-hacking information, which supports rapid, thorough, and well-defined security responses to any and all blockchain security issues.
The Sentinels use a blockchain distributed policy to crowdsource threat and risk information and data. Their services, which report hacking incidents, distribute security news and the latest pertinent information and validate threats and risks. These are all currently housed within the Sentinel Portal, a growing and flexible consensus and incentive-based system.
Additionally, Sentinel Protocol provides specific and customizable tools blockchain companies can lean on to mitigate risk. Sentinel will eventually offer a machine-learning based filtering wallet to combat scams, neutralize malicious URLs and Malware, and identify unexpected behavior. D-Sandboxing is also available, tests for suspicious file and link activity, as well as augmenting threat tests, simulations and generating threat vectors.
SafeNet ProtectServer is another first line of defense available to blockchains. SafeNet has developed Hardware Security Modules (HSMs), which provide flexible and secure encryption, signing, and authentication services to application developers.
SafeNet offers several key features. Offerings are customizable and scalable, for a variety of platform configurations and network needs. With available APIs, SafeNet’s HSMs can be integrated easily into custom or third-party applications. SafeNet also enables emulator software, native algorithm support, and validation services for all blockchain platform software requirements.
Other blockchain security solutions have opted to pursue different routes. Ledger Blue is a security-centric wallet, built around the security features Ledger already offers, with an added element of user connection. REMME is a password-free security and authentication system appropriately targeting security exchanges, the most hacked corner in cryptocurrency today.
With all the bad news emanating from blockchain-based business applications, it is encouraging to see the emergence of a number of strong platforms, committed to ensuring a safe and secure user experience for crypto investors, enthusiasts, and entrepreneurs.