Hackers Target ICOs – Are Forked Coins a Safer Bet?

Hackers Target ICOs - Are Forked Coins a Safer Bet?

Investing in a new coin launched through an Initial Coin Offering (“ICO”) is one of the riskier things you can do with your hard-earned cash. And surprisingly, most of this risk is not due to market volatility or speculative bubbles. Rather, cyber criminals pose the greatest threat to ICO investors.

 

Hackers Have Stolen Over $400 Million From ICOs

After conducting an extensive study of the 110 top-performing ICOs, analysts at global thinktank Ernst & Young found that more than 10 percent of the $3.7 billion raised by their new coins were stolen. This loss is separate from the market impact of fraudulent ICOs, which are a huge problem as well.

Hackers commonly steal digital coins by accessing an investor’s private wallet. They use spyware, malware, or phishing techniques to get your private key, and simply empty your account once they have the access information. Commonly, this is done by spying on your online communications, keystroke tracking, or gaining access to wallet storage devices. In some cases, however, hackers use faulty code in an ICO to rob early investors.

Companies launching ICOs are typically supporting operations without a revenue stream, so new coins are often rushed to market. Desperate for capital, these companies often skip software security and verification best practices. Hackers then swoop in and exploit the flawed code to re-direct investors to phishing sites. These forgeries are designed to look just like the ICO’s actual site, except when you try to purchase coins your money is stolen rather than invested.

 

Bitcoin Forks May Offer Greater Security

Thefts, fraud, and hacking are plagues for the cryptocurrency community. Most investors struggle to cope with the uncertainty of the volatile market as it is, and adding a risk of total loss through theft hedges many prudent investors out of the market.

Like most ICOs, forked coins require specialized wallets or accounts on compatible exchanges. However, if you keep your currency on an exchange like Coinbase, Bitstamp, or HitBTC, you do not have control over your private key. Instead, the company holds the private key to the wallet where your coins are stored. As the 260,000 customers impacted by the recent Coincheck hack can tell you, this is not the safe bet it seems to be.

If you want to be sure your coins are secure is to move them into a secure, verified wallet with a private key you hold yourself. Moving your coins to cold-storage is definitely your safest option, and the internet is full of tutorials showing you how. However, with all the activity in the crypto market, keeping you coins safe in cold storage can cause serious FOMO. So, how can you cash in on valuable new coins without jeopardizing your entire portfolio?

Even if you keep your bitcoin safe in cold storage, you can still take advantage of the several hard forks planned for 2018. Whenever you choose, you can claim a forked coin from the company offering it without putting your existing investment on the line. When doing so, however, be sure to follow all the proper protocols and verification procedures you can. Hackers may prefer ICOs, but they don’t ignore any opportunities. Bitcoin Candy (“CDY”), one hard fork that has been criticized for its rush to market and low investment value, has already been dealing with a fake wallet app that hackers have circulated to steal private keys.

Cryptocurrency investors are not exactly a cautious bunch. However, when it comes to cybersecurity, it’s always better to be safe than sorry. When new forked coins drop, make sure you understand how, where, when, and from whom you claim them. Just like with ICOs, phishing and fake wallet apps are a problem for forked coins. However, unlike ICOs, the pressure of FOMO won’t rush you into making a move you regret.

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