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Crypto exchange hacked and new methods of protection

09/27/2018
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Each crypto exchange hacked gives developers the signal that it is necessary to apply new security methods. Now security issues are becoming the first, as each site has huge user capital. Most operators use one or more systems against hackers.

Authorization of operations

The simplest and common was two-factor authentication. This is a widespread method of control in the banking sector: for any transaction, a one-time password is entered, sent to the client on the phone or e-mail. Practice shows that such an approach is difficult to call reliable since attackers are well aware of how to crack a box or duplicate a mobile phone. With the help of a special Authenticator application, you can provide more reliable protection. It blocks access to the system if there is a compromise in logging in by requesting a special code.

Multi-signature is another method of protection against hacking of the crypto exchange. This type of protection involves several keys from the wallet, which are placed by different owners. To access the funds, you must necessarily use all electronic signatures. But this approach can be ineffective. Experts say that all signatories should be independent of each other, then the system functions normally, otherwise it fails. It is required to use additional means of protection besides the multi-signature since it is not capable of becoming the last line of defence.

Hot and cold storage

The most reliable option for protecting against hacker attacks is the division of funds into two purses: cold and hot. The latter is an online repository that is used to implement all transactions. Cold - this is an offline repository, which is located on a secure physical medium. In addition to this protection, a multi-signature system is often used in a cold wallet. Each exchange uses a different distribution of user funds between purses. The share of cold storage will be greater, the safer it will be for the funds. The ideal option is when the coins are online only during the transaction. However, complete safety and efficiency are incompatible, so the optimal proportion is selected.

Insurance

Insurance - this is not an option to protect against a hacking crypto stock exchange, but a means for guaranteed return of funds to users, which they lost as a result of the attack. In Japan, this option is used quite often. Mitsui Sumitomo Insurance with Bitflyer as a partner ensures against damage due to cyber-attacks, disruptions to trading programs and unauthorized access, fraudulent actions or mistakes made by employees of the exchange. Insurance payments are made for amounts ranging from $ 90,000 to $ 9 million. Another Japanese stock exchange co-operates with insurers - Coincheck. Its insurance agent guarantees payment of up to $ 1 million with unauthorized access to an account that is protected by two-step authentication.

Conclusion

Crypto exchange hacking is not a new phenomenon; hacker attacks are often repulsed. The first break-ins were more successful since the site owners did not care much about protection yet, but with each new attack the methods of counteraction are improved and the protective mechanisms are developed.

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