Bitcoin Hacked ! Read All About it.
(Just don’t check the facts)
Papers exist to sell papers. An editors job is an unenviable challenge ; if there’s lots of news or no news they need to fill 60 pages (half with the ad paying brands – the real customers) .
So is it any wonder that the media love the Crypto rollercoaster? Bubble! Billionaire! Dark! Hacked! Sound familiar?
The reality is that the Bitcoin has not been hacked since it’s genesis in 2009. Read on below to find out just why this crypto nut is just so hard to crack.
(What has been hacked however, are some of the exchanges and websites that link or use Bitcoins and other cryptocurrencies or blockchains. This much is true. )
These are where the real security holes lie. As has been well documented in the Nakamoto Institute paper by Nick Szabo – Trusted Third Parties are Security Holes here.
But hang on a minute here – because banks get robbed doesn’t mean we should ban cash… It means we should challenge our bank’s security more ; and lets remember here that banks lose more money through internal white collar fraud than Point Break style hold ups…
People often forget that cryptocurrency and blockchains are in their innovative infancy – it’s early days.
And let’s not forget here that WD40 failed 39 times…before finding the magical 40th formula.
By comparison – looking at the history of early flight we can see that many of the early aeroplanes crashed, but that didn’t mean the principles of lift, aerodynamics and three axis control were bad… (what could possibly go wrong with the ‘Flying Sausage’?)
[kad_youtube url=”https://youtu.be/fw_C_sbfyx8?t=1m32s” ]
Here are the three most important hacks / daylight robberies in the new frontier crypto-land so far:
- Mt.Gox was a good currency exchange back in the day (2014 – ancient history) handling just shy of 80% of Bitcoin exchanges – but unfortunately got attacked by none other than…. it’s CEO… read more about embezzler Mark Karpeles from MtGox here
- The DAO was an early hack on a loop hole in the Ethereum Smart Contract code. It was pretty serious and involved the first hard fork and rollback of a blockchain to recover the cash. You can read more about the ATM that never stops giving experience here.
- The Parity Multi Sig Fail. Recently (Nov 2017) there was a not insignificant $300M hack into some poor multiple signature code over at Parity. Again, user (programmer) or pilot error . Investigations are still in progress… But learn more about what happens when you ‘find’ money and then burn it all (huh?) here
Tell me More about Blockchains
‘Media Hacks’ aside – what are unhackable-so-far- Blockchains actually so good at?
Blockchains only a do a few things. But it turns out they do them really well.
Firstly blockchains create a consensus around ordered events. This-Then-That and definitely not That-Then-This. And everyone agrees. That’s what they do best.
It’s seems like such a small thing. But it’s a big deal.
Blockchains achieve this big thing by doing just two things.
1. They use asymmetric cryptography to authenticate signatures (and so permissions & identities).
2. They use Distributed Ledgers Technology (DLT) and in so doing create a consensus (a single shared truth).
DLT is a fancy way of using these signatures in cryptographically linked chains of hashes (blocks) and using ‘miners’ to verify transactions – in the process creating consensus and replicating blocks.
The Hash Horse
The main thing is the hash. The hash is the shire horse of cryptography. And it’s been steadily ploughing the fields of cryptoland since the 70’s.
What is new is the successful recombination of widgets; choosing what to leave out and what to include .
To create a successful digital currency you need to solve the Byzantium General’s problem AND the double-spend problem in a secure and easy to use way.
Just 58 more failures than WD40 later (that’ll be 98) in 2009, Bitcoin was born.
Not impossible. Unlikely.
You can of course hack blocks. But to do this you would need to reverse engineer with brute force 500,000 blocks of hashes on 8000 nodes simultaneously with over 51% agreement amongst Proof-of-Work miners … all within 10 minutes. (Continuous forking of Bitcoin does actually make this more probable).
We’re not saying it’s impossible. But we are saying it’s unlikely.
For a start you’d need quite a bit of energy and computing power. Computing at 10,000 hashes per second you’d need about an Octillion years (10 x 27 ) to crack just one 2128 hash.
Which is less likely to happen than the whole world being struck by a giant meteor in the next 2 seconds*.
As we say – not impossible. Just highly improbable. It might just happen with Quantum Computing. But since the dawn of computing that has always been ‘just 30 years away’ that too is unlikely.
BlockMark & BlockChain
Blockchains are hard to crack and fiddle with. BlockMark builds user friendly apps on Public Permissioned Blockchains that solve real world problems.
Like building secure, controllable certificates and tickets to defeat fraud and make the world a better place
In 2016 Fraud Costs the UK economy £6000 per second. That’s £193Bn per year. Or this much since you started reading this page
Read the full Financial Fraud Action UK 2016 report here.
Hip or Square? The Future is Blocky
Blockchains have been described at the 5th computing paradigm after Mainframe, PC, Mobile & Social.
They bring the promise of trustless protocols and the possibility of a distributed world computer that is transparent and both democratic and secure.
Not all businesses will benefit from blockchains (or need blockchains) but it has huge potential not dissimilar to the potential The Information SuperHighway in 1995.
At BlockMark we believe the future is bright – the future is blocky.
*If you’re reading this we are still here..