What the Bitfinex Hack Means for Bitcoin Multi-Sig Security
"With our BitGo wallet solution it becomes impossible for our users to lose their bitcoins due to us being hacked or stealing them." So wrote Bitfinex CFO Giancarlo Devasini about the bitcoin exchange's then-new multi-signature security architecture roughly a year before $60m was stolen in one of the industry's highest-profile hacks this week. While we know that multi-sig accounts were impacted by the hack (which doesn’t look good for the security feature), it's still unclear exactly how this breach occurred. Still for many it begs the question, what does this breach mean for....
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BitGo has declared that its systems were not breached, and its software functioned correctly during the Bitfinex hack. Co-founder and CEO at BitGo, Mike Belshe, wrote on the company’s blog saying: Our job is to protect your Bitcoin and continue to improve the security of the service. BitGo systems were not breached in this attack and our software functioned correctly. This may seem like an inadequate explanation, because everyone wants to know “what needs to change to avoid what happened in this case,” and we understand that. Fortunately, the Bitfinex configuration was unique and other....
Last week’s Bitfinex hack, in which Bitcoin’s leading exchange lost almost 120,000 bitcoins valued some $70 million USD at the time, represented a depressing realization for the Bitcoin community. Where many had hoped that multi-million dollar hacks and loss of customers funds were a thing of the past, it became clear that storing bitcoins on an exchange is still not as secure as it perhaps should be. In an industry first, Bitfinex imposed an Extraordinary Loss Adjustment on all customer funds; re-opening balances this week show a cut of about 36 percent per account. But the hack also....
BitGo’s Mike Belshe has said that questions raised about the security of bitcoin with some suggesting that digital currencies can never be secure are wrong. After Mt. Gox, the second biggest security breach of a bitcoin exchange took place earlier this month when the Hong Kong-based Bitfinex halted trading after hackers stole around $70 million worth of users’ bitcoins. As a result, questions about the safety of blockchain technology and the future of bitcoin quickly arose. As the company that is the leading security platform for bitcoin and blockchain technologies that was delegated to....
More importantly, the question becomes what this investigation means for Bitfinex as a company, and their “legal gray area” shenanigans. It was only a matter of time until Bitfinex would get into legal trouble over their recent hack. One user in Massachusetts has filed a police report to recover his missing bitcoin funds. During the hack, nearly US$70m worth of Bitcoin were stolen, and no users were compensated. Instead, they all saw their balances punished even further to make up for the balance sheet losses. The way Bitfinex handled the whole hacking event was not exactly professional,....
In light of the Bitfinex hack and other hacks, the bitcoin community faces the need to improve security and is considering various options, according to a Bloomberg article by Yuji Nakamura and Olga Kharif. The article suggests it may be time for some type of regulation. The Bitfinex attack demonstrates the fact that the industry has not come up with a way to ensure security, despite improvements to bitcoin’s infrastructure. Industry’s Reaction: Lay Blame. Observers do not expect the investigations into the Bitfinex hack will reveal any insights on how to improve protection. What is more....