In January 2019, Coinbase noticed something strange going on in Ethereum Classic, one of the cryptocurrencies people can buy and sell using Coinbase’s popular exchange platform. Its blockchain, the history of all its transactions, was under attack.
The attacker had gained control of more than half of the network’s computing power and was using it to rewrite the transaction history. That made it possible to spend the same cryptocurrency more than once—double spends.
Another exchange Gate.io, wasn’t so lucky, losing around $200,000 to the attacker.
In total, it was reported publicly that hackers have stolen nearly USD2 billion worth of cryptocurrency since the beginning of 2017, mostly from exchanges, and that’s just what has been revealed publicly.
Marketing slogans and headlines called the technology "unhackable". We have to clarify that all these attacks weren’t attacks on the blockchains themselves, but on the exchanges, the websites where people can buy, trade, and hold cryptocurrencies. These exchanges are built on a blockchain platform.
So what attracts the hackers to hack into a cryptocurrency exchange?
Reason - the blockchain platform which supports these exchanges are attractive because fraudulent transactions can’t be reversed as they often can be in the traditional financial system.
Currently the attacks seems to be concentrated on newly launched exchanges as any attack on a popular blockchain could be extremely expensive.
AI was touted as the solution to fight of these attacks by monitoring transactions and detect suspicious activity. As pointed in our earlier article titled ~ 'Contrarian Views: AI and ML are no silver bullets for cybersecurity', is AI a cure all?