Purchasers of Bitcoin wallets usually have one priority topping their lists: security. What’s the truth about the security of these wallets?
When buying conventional wallet coins and paper money, people often prioritize characteristics like the size, color, shape, and number of compartments.
However, purchasers of Bitcoin wallets — the software programs that facilitate storing someone’s cryptocurrency-related wealth — usually have one priority topping their lists: security.
So, the companies behind those wallets wisely emphasize why their products are more secure than what competitors offer and why that’s the case. But, beyond the marketing language, what’s the truth about the security of these wallets?
Guessing an Individual Bitcoin Wallet Key Is Tremendously Unlikely, Crypto Expert Says
People appreciate comparisons when thinking about the likelihood something might happen. Brian Liotti of the website Crypto Aquarium had that in mind when he carried out research and found the probability of guessing a Bitcoin key for one wallet is as likely as winning the Powerball nine times in a row.
So, that’s undoubtedly comforting to people who raise their eyebrows at the prospect of using a digital method to store their cryptocurrency investments.
A Wallet Owner Gets Locked out for Months
There’s also the detailed account of Mark Frauenfelder, who owned a Trezor wallet and couldn’t access it for several traumatizing months after misplacing the PIN that served as recovery words for the software. His tale of woe proves a hacker couldn’t contact a Bitcoin wallet manufacturer, masquerade as a wallet owner and get the goods for access.
A Teenager Hacked a Tamper-Proof Wallet
Ledger, a French company that sells Bitcoin wallets, found itself receiving unwanted publicity when a British teenager disclosed a proof of concept that allowed him to break into the Ledger Nano S, a wallet the company had advertised as unhackable. The hack focuses on the device’s microcontrollers.
One of them stores the wallet’s private key and the other acts as a proxy. The proxy microcontroller is reportedly so insecure it cannot differentiate between authentic firmware and that which a cybercriminal creates.
This case study, as well as others associated with less-than-locked-down Bitcoin wallets, emphasizes how people should not get too comfortable after buying a Bitcoin wallet, even one considered as being among the best of the best. The same goes for storing other types of money: Following best practices is always the ideal approach.
If a person owns collector coins, it’s essential to learn how to protect them from potential sources of damage — such as temperature extremes, acids and humidity. Although they exist in the cyber-realm, Bitcoins need safeguards of their own concerning hackers, especially as even the most high-tech options show they need improvement.
Alleged Break-Ins to McAfee’s Wallet
The Bitfi Bitcoin wallet, backed by cybersecurity executive John McAfee, offered a $250,000 bounty to anyone who could successfully hack it. And, in August 2018, a security research firm called OverSoft NL claimed success. The company behind the wallet then issued a second bounty in an attempt to find the weaknesses.
People in the cybersecurity sector expressed their frustrations about the reward, since participants have to abide by the company’s rules. In other words, if cybersecurity experts hacked the wallet in a way the company didn’t specify, they would not win the reward.
But, hacks carried out by malicious players never seem to follow such parameters. Often, they involve unusual methods that exploit vulnerabilities the manufacturer never fathomed. Other people said they had hacked the wallet before OverSoft NL, but not per the company’s rules.
Even representatives from the cybersecurity firm expressed doubts that they’d actually receive the money, believing the bounty to be nothing more than a marketing ploy. The bounty program has since become discontinued, with the company promising to launch another soon.
The Marketing Language Could Tempt Hackers
Whenever something in the tech industry gets presented as impossible to infiltrate, both ethical and malicious hackers frequently see a challenge to try and prove otherwise.
As John McAfee spoke of his wallet on Twitter, the tone could easily come across as overconfident and cocky: “For all you naysayers who claim that ‘nothing is unhackable’ & who don’t believe that my Bitfi wallet is truly the world’s first unhackable device, a $100,000 bounty goes to anyone who can hack it…” And indeed, hackers got to work and accepted the challenge.
Cryptocurrency Wallet Owners Cannot Be Too Careful
Although we’ve seen here how research shows Bitcoin wallet hacks are unlikely and that a wallet owner himself couldn’t even get access to his funds after losing the PIN, case studies show hacks are still possible.
People should always perform adequate research about security measures built into individual wallets but also use them intelligently by following good cyber security habits and never assuming a wallet couldn’t get hacked.
About the author
(Security Affairs – Bitcoin, cybercrime)