Hacking and Blockchain Networks
*The Infamous Mt. Gox Hack
The year of 2013 was a dream come true for Mark karpeles . His Japan-based company Mt. Gox (Magic The Gathering Online Exchange) was by far the biggest bitcoin exchange in the world. It was the world’s largest bitcoin intermediary handling 70% of the world’s bitcoin exchanges. Things were looking good for Karpeles and he was working on many interesting concepts like the Bitcoin Cafe to get more people into bitcoin network . However, there were cracks emerging underneath the surface .
Problems with world's biggest exchange of crypto at that time:
(i) Lack of A VCS (Version Control Software) to monitor the code changes.
(ii) Lack of A Testing Policy
(iii) Bottleneck Issue (changes made had to be approved by ceo Max karpeles himself).
In April 2014 Mt. Gox announced that approximately 850,000 bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than $450 million at the time .
**The DAO Hack
The Decentralized Autonomous Organization was a complex smart contract which was going to revolutionize Ethereum cryptocurrency forever. It was basically going to be a decentralized venture capital fund which was going to fund all future DAPPS made in the cybersystem .
The Final ATTACK
On 17th June 2016, someone exploited this very loophole in the DAO and siphoned away one-third of the DAO’s funds. That’s around $50 million dollars.
The loophole that the hackers discovered was pretty straightforward in the hindsight.
If one wished to exit the DAO then they can do so by sending in a request. The splitting function will then follow the following two steps:
• Give the user back his/her Ether in exchange for their DAO tokens.
• Register the transaction in the ledger and update the internal token balance.
What the hacker did was they made a recursive function in the request, so this is how the splitting function went:
• Take the DAO tokens from the user and give them the Ether requested.
• Before they could register the transaction, the recursive function made the code go back and transfer even more Ether for the same DAO tokens.
This went on and on until $50 million worth of Ether were taken out and stored in a Child DAO and as you would expect, pandemonium went through the entire Ethereum community.
***Nice Hash Hack
On December 6th, 2017 at 00:18 GMT,The Slovenian based mining company NiceHash was hacked for 4700 BTC which is around $80 million.
Marko Kobal, the chief executive officer of NiceHash, appeared on Facebook Live to address concerns about the attack. He didn’t reveal much apart from saying that an employee’s computer was compromised during the attack which lead to the heist.
The attackers basically used the employee’s credentials to gain access to the NiceHash system.
Press release statement:
“Importantly, our payment system was compromised and the contents of the NiceHash Bitcoin wallet have been stolen. We are working to verify the precise number of BTC taken. Clearly, this is a matter of deep concern and we are working hard to rectify the matter in the coming days. In addition to undertaking our own investigation, the incident has been reported to the relevant authorities and law enforcement and we are co-operating with them as a matter of urgency.”