Should You Be Worried About the Coincheck Hack?

In recent years, cryptocurrency has become an increasingly popular payment method, offering users anonymity, clarity and convenience.

Some of the industries accepting cryptocurrencies, like Bitcoin, for example, include software companies and online casinos such as – even political campaigns have been funded by them!

However, if you’re just getting to grips with cryptocurrencies or you’re already using them to make payments, the recent Coincheck hack may have put some doubt in your mind as to how safe they are.

What Happened in the Coincheck Hack?

At the end of January this year, hackers stole approximately $533 million (58 billion Japanese yen) worth of XEM cryptocurrency from Coincheck Inc. – an exchange company based in Tokyo.

This is one of the biggest ever heists of cryptocurrency, overtaking the $400 million of Bitcoin that was stolen in 2014 from Mt Gox.

The creators of XEM, NEM Foundation, have been working to trace the stolen cryptocurrency, and have located an unidentified account that’s holding the stolen coins. However, the hackers have already started trying to move these around, placing them onto six exchanges where they can be sold on.

Until the money is recovered (if at all), users’ losses are going to be covered by the exchange’s own cash reserve. This will mean they’ll need to pay out $426 million (46.3 billion Japanese yen) – 20% less than the stolen virtual tokens’ overall value.

After the news of the hack came to light, NEM’s price plummeted by nearly 20% – but this has since been recovered.

A Growing Concern

The hack on Coincheck is just one of the latest attacks on cryptocurrencies. Many cybercriminals are exploiting the weaknesses of young businesses (that are often unregulated) and are handling large sums of money from various people/businesses.

As well as the cases mentioned above, a Slovenian digital currency trading platform, NiceHash, lost $70 million worth of Bitcoin early this year, and Youbit, a bitcoin exchange company based in South Korea, had to file for bankruptcy in December last year because they were targeted twice by cybercriminals in a short period of time.

This means large-scale hacks are a huge risk for all who are involved in the crypto community.

How Can Cryptocurrency Be Kept Safe from Hackers?

Despite the ongoing concerns you may have about how safe your cryptocurrency is, there are several things users can do to help protect it. This includes:

  • Being careful where you’re doing business – Use due diligence before you send money anywhere, checking who’s behind the company and how long they’ve been in business. Avoid them if they’ve been involved in a lawsuit and always use a reputed exchange, even when you’re buying or selling with cryptocurrency
  • Store your money offline – When you have a large amount of money, it’s wise not to keep it stored online on an exchange. Instead, transfer your coins to a wallet that’s stored on your computer
  • Back everything up – Make sure you’ve always got instant access to your cryptocurrency by keeping your 24 words safe and secure

Essentially, the key to keeping your cryptocurrencies safe is to act with as much precaution as you do with your traditional money. Always research your options, take extra care when dealing with transactions and do all you can to keep your details safe.

Photo via Pixabay.


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