- July 26, 2020
- Category: Business, Cryptocurrency, ICOs
Cryptocurrency is a fairly new venture that has made some dramatic waves in the financial industry. That being said, the way that these cryptocurrencies get started up is another rather sketchy process. The initial coin offering, or ICO, that is needed to start up a cryptocurrency is a somewhat difficult process to understand. In order to start these cryptocurrencies, investors are offered coin offerings in other cryptocurrencies to help fund the startup. This might seem safe enough, but in recent months something has changed.
Hackers Take Advantage of Crypto Craze
In a report that was issued by Ernst & Young it was found that between the years 2015 and 2017, over 10% of all proceeds of ICOs were found to have been stolen by hackers. This percentage might not seem like a lot in the grander scheme of things when you look at the billions that are being traded in cryptocurrency each year. The stolen proceeds, however, total about $1.5 million each month.
Hackers are not just stealing money, they are stealing other things as well. The study found that these hackers also stole personal information like addresses, bank details, credit card numbers and even phone numbers from those investors that were taking part in the ICOs of the companies in which they were investing. So what made these cryptocurrencies so vulnerable?
Why Is Cryptocurrency so Vulnerable?
For starters, cryptocurrency is not all that well regulated and is not all that well monitored which means that there are few safeguards in place to protect them and to protect the people that are involved in the cryptocurrency market. Hackers essentially see the large amounts of money being exchanged on a relatively simple and unguarded market and therefore see an opportunity to take the money for themselves.
The report also stated that since cryptocurrency and the accompanying markets are not properly backed by the government, they are also vulnerable. Since the market is so chaotic, it provides hackers with the perfect cover to come in and take the money and the information that they want then essentially disappear with little to no consequences.
Overall, this frenzy that centers around cryptocurrency makes it terribly vulnerable to any hackers that want to take advantage. This might be changing, however. With more and more people getting into the cryptocurrency market and more and more governments taking notice, there is now the potential for safeguards to be put in place.
What Does This Mean for the Market?
This means that though the initial offering of these cryptocurrencies was rather hectic, there is now more of a chance that the cryptocurrency market will stabilize and that it will also end up with more safeguards and regulations. Greater regulations might not seem like a good thing but it will mean that there will be more laws centering around cryptocurrency and therefore more laws to protect people from hackers and others that are looking to take advantage. With added transparency, investors can feel better about investing so that they can then do more to protect the people that are investing as well as the money that is being invested.