Main menu

Pages

How cryptocurrency is hacked, Digital currencies swept the world of economics and physical exchanges not long ago, and we're invested in by large companies, and hopes were pinned on them as the currency of the future and the digital present, but they proved unsuccessful, or perhaps unwilling for these words after millions of dollars were stolen from Its value after hacking digital currencies.


How cryptocurrency is hacked



What are digital currencies?


Virtual currencies (Cryptocurrency) are a type of currency that takes a purely digital form, is published by a specialized developer, and then accepted by digital groups, and this currency has been seen as a digital currency, but in fact, not all digital currencies are virtual.


Digital currencies represent the new generation of currencies because of the features they offer that paper currencies lack in most or all of them. Digital currencies are available to everyone and anyone can use them, and their actual value is not affected by the economies of countries and economic matters, so their value is determined according to the degree of their circulation, in addition to that digital currencies It cannot be monitored or tracked, you can only send or receive money with a private key that only you know and no one can track, and you can change it in case someone knows it.


How is that? You may ask, because digital currencies may be shorthand for the transactions of fast money exchange companies such as (Paypal), which depend on the transfer of real money, while the virtual that we are talking about does not have a physical formula or composition, but is completely digital.


It is known that this currency follows its own system of exchange, buying, and selling, and is still not regulated internationally, and some of the most prominent examples are: (Bitcoin), (Litecoin), (Dash), (Peercoin), (Dogecoin) and (Primecoin).


Digital currency history


In fact, the idea of ​​this currency was not completely new, but it has emerged significantly in our contemporary time due to technical progress, as a similar idea was invented in 1996 by a company called (E-gold), at which time the idea of ​​digital currency was built on the basis of the exchange for virtual gold. According to the value of real gold.


In 2006, the company (Liberty Reserve) made another different attempt, which is to allow the exchange of US dollars or euros with dollars or euros bearing the name of its company, with the possibility of free exchange for that last virtual currency.


Unfortunately, that last company was not spared from money laundering; Which prompted the US government to stop its work, and it is worth noting that (PayPal) works in a similar way, but it managed to survive thanks to its subjection to international regulation.


How are digital currencies hacked?


The promotion of Bitcoin or Ethereum has always been considered completely safe and cannot be hacked thanks to the closed mechanism that it follows in its work, but contemporary history has proven to us the validity of theories about the possibility of hacking digital currencies, including these currencies.


And it seems easy to hack weak or small digital currencies more due to the low intensity of their exchange, and in contrast, currencies that own large areas of digital blockchain technology (Blockchain), these chains depend on the idea of ​​direct exchange between the user and the other user without the presence of an intermediary, and thus the strength The density of these chains affects the likelihood of a breach and the extent of damage that may occur.


In general, there is the main method that can allow the theft of funds by circumventing the digital blockchain system.


Double-spend attack


This method allows the criminal to steal funds by reversing the trading currencies in the digital blockchain, and sometimes this attack is coded for 51%, where if the attacker wants to break into the Bitcoin blockchain, he must control more than 51% of the hash power in the network digital currency.


This means that he has to pay an exorbitant amount of money to hire ASIC mining techniques or collaborate with huge mining pools, in order to gain hashing power that outweighs all other users.


Doing this successfully may allow the aggressor to mine parts of the blockchain without showing it or revealing it to the rest of the users, and from here he can modify and choose the method of trade exchange that takes place in these parts of the digital blockchain, and at the same time, the aggressor can spend his money of (Bitcoin) in exchange for another virtual currency or send money for exchange.


After the aggressor exchanges the Bitcoin in his possession, he is now showing his secret blockchain parts to the rest of the users, and what is interesting here is that the Bitcoin protocol system relies on the longest part of the digital blockchain as the correct and secure part of the exchange, and since The aggressor has more hashing power than any other user, this will force the rest of the legal users to accept these parts of the blockchain as the correct record of commercial and exchange operations or as the longest part of the digital blockchain, but in fact, it is a deception process to attract users and Hack digital currencies without anyone's attention.


Although the aggressor is able to choose the exchange or commercial operation that can be added to the blockchain, he cannot guarantee the real payments he made to other addresses, but this allows him at the same time to exchange one Bitcoin twice.


This may seem a long and costly method due to the closed system on which digital blockchains are built, and it is worth noting that it will most likely be unsuccessful in large and long blockchains, because in this case, the aggressor will not be able to maintain his advantage in building longer parts of the blockchains of the real ones, being extremely huge.


The probability of success of this method


Since the previous method may fail with huge currencies such as (Bitcoin) and (Ethereum), its success rate will rise significantly with digital currencies that suffer from a weak density of hash power within the cryptocurrency network.


For this reason, the aggressor may resort to attacking other currencies that suffer from this problem but are of high value, such as (ByteCoin), (LiteCoin Cash) and (Bitcoin Gold), and the method may succeed here by relying on cloud services in the mining process or employing a special platform that is distinguished With great strength in retail such as (NiceHash).


According to studies, the aggressor who performs a double payment attack on (Bitcoin) for an entire hour will cost him about 700 thousand dollars, while a smaller virtual currency such as (ByteCoin) will cost him no more than 539 dollars, despite the total market value reaching nearly 600 Million dollars.