Answering Vitalik Buterin's Hard Questions For the Blockchain World Part 3: Hacks, Security, and Theft

Ethereum co-founder Vitalik Buterin put forward a series of open questions to the cryptocurrency community in a recent discussion with Mars Finance International WeChat group, postulating seven issues present within the current blockchain ecosystem.

Erin's "Hard questions for any blockchain people" deal with some of the biggest obstacles that stand between the current state of blockchain technology and widespread adoption, highlighting hashpower centralization, the lack of "Useful" large-scale apps, the high frequency of hacks, dApp scalability and latency, issues with consensus methods, and the inefficiency of on-chain governance.

"Why are there not yet good solutions to account security? When will the problem of account hacks and thefts be solved?".

Hacks, security exploits, and theft are a common occurrence within the cryptocurrency sector - large-scale hacks such as the Mt Gox disaster have become enshrined in the mythos of the blockchain revolution, permanently reshaping the cryptocurrency landscape.

In order to "Solve" the issue of account security, it's important to distinguish the vectors via which hacks and thefts are executed.

In the current cryptocurrency ecosystem, hacks can be generalized into those that target third-party institutions that hold crypto assets on behalf of users, such as exchanges, and those that target individual users, such as malware, phishing, hacks, and even physical strong-arm robbery.

The cryptocurrency market is currently a target-rich environment for hackers seeking to "Decentralize" crypto holders away from their investments.

In total, almost 1 million Bitcoin - about 5% of the total amount of all Bitcoin ever to exist - have been lost the 2013 Silk Road hack, the 2014 Mt Gox, Cryptsy, and Mintpal hacks, the 2015 Bitstamp and Bter hacks, the 2016 Bitfinex hack, the 2017 Nicehash hack, and four hacks in 2018 - Coincheck, BitGrail, CoinSecure, and Coinrail.

Cryptocurrency holders are targeted by a broad spectrum of hacking attempts, most of which attempt to capture private key data.

More malicious hacking attempts include WPA "Krack attacks" that compromise the security of wifi networks, allowing hackers to view all data transmitted via a WLAN. However, there is a method of storing cryptocurrency in a completely secure manner - hardware wallets.