2021 was a huge year for cryptocurrency adoption and growth. In the last year, we have seen a huge spike in large-scale companies such as Tesla, PayPal, and Mastercard getting on board the cryptocurrency train. In another major step toward global Bitcoin adoption, El Salvador also became the first country in the world to adopt bitcoin as legal tender.
But with growth, comes more opportunity for individuals to do the wrong thing. 2021 also saw some of cryptocurrency’s biggest hacks that lost the community over $4 billion in cryptocurrency.
So, as we begin 2022, let's take a look at 2021's biggest attacks and what we've learned from them.
The Poly Network hack back in August 2021 was the biggest cryptocurrency exploit in history! More than $600m in assets were stolen from the multi-chain protocol, including $264m worth of assets stolen from Ethereum wallets, $250m from Binance Smart Chain wallets and $85m from Polygon.
Following the hack, the cryptocurrency community banded together to stop the funds being used by the hacker. This led to the hacker actually returning $260m of the stolen funds after being ‘tracked’ by various security firms such as Slowmist and Chainalysis.
Just at the start of December 2021, hackers stole a total of $196m from cryptocurrency exchange Bitmart via a hot wallet compromise hosted over the Ethereum and Binance Smart Chain blockchains. The funds stolen from the wallets included mostly ‘memecoins’ such as SHIB, as well as a variety of BSC-based tokens that offer similar utility. Blockchain security firm Peckshield stated the entire scheme can be attributed to a simple “transfer-out, swap and wash” maneuver.
In October 2021, Cream Finance was hacked for the 2nd time that year! Hackers stole an estimated $130m worth of cryptocurrency assets via ‘flash loans’, the platform’s lending system. Back in August, hackers stole $18m worth of ETH thanks to a smart contract issue.
In total, the hacker managed to get away with a massive range of assets including 2,760 ETH, 76 BTC and more than $10m in stablecoins.
If one thing can be learnt from the major cryptocurrency hacks of 2021, it’s that your assets are NOT safe on an exchange or in experimental projects/contracts. Unfortunately, as the cryptocurrency industry grows, these places are increasingly becoming targets for elaborate hacks. It's a highly-rewarding activity; therefore it pays for ever-increasing time and effort spent on plotting hacks. Even if an exchange/protocol follows all the safety guidelines, they will forever be in an arms race with criminals.
When you store your assets on an exchange, specifically, you rely on them to keep it safe. The problem is, exchanges are not cybersecurity enterprises. They run financial marketplaces first, and experience has shown they can’t guarantee top-notch security.
A SAFE ALTERNATIVE
There is one sure way to keep your assets safe: hardware wallets. These devices allow you to retain the ownership of your private key, while also making it easy to trade with a wide range of cryptocurrencies when you safely connect to a computer. By securely switching between the functionality of hot and cold wallets, you can rest assured that your crypto wealth is in your hands, even if you lose the device.
To check out the full range of wallets Coinstop offers, please check out our store.