Introduction
Bitfinex, one of the world’s largest and most popular cryptocurrency exchanges, was hacked in August 2016. The hack resulted in the theft of roughly 120,000 bitcoins, valued at the time at around $72 million. The hack was a major setback for the cryptocurrency industry, as it undermined the security of digital currency exchanges and exposed vulnerabilities in existing security protocols. In this article, we will explore how the Bitfinex hack occurred, what security measures were in place, and what steps were taken to ensure that similar attacks do not occur in the future.
What Happened?
On August 2nd, 2016, Bitfinex reported that it had been hacked and that around 120,000 bitcoins had been stolen. The company reported that the attack was sophisticated and targeted, and that the perpetrators had used multiple techniques to gain access to the exchange’s servers. Bitfinex also reported that it had taken immediate steps to secure its systems and to investigate the attack.
Lack of Security Measures
Despite the fact that Bitfinex was one of the world’s largest and most popular cryptocurrency exchanges at the time, it did not have the same level of security as larger financial institutions. Bitfinex had only implemented basic security measures, such as two-factor authentication, which was easily bypassed by the attackers. In addition, the exchange was vulnerable to attack because it was not using a multi-signature system, which would have required multiple users to sign off on any transaction before it was processed.
The Aftermath
In the aftermath of the hack, Bitfinex implemented a series of security measures to ensure that similar attacks would not occur in the future. The exchange implemented a multi-signature system, added additional layers of security, and began implementing a cold storage system to store customer funds. In addition, the exchange implemented new protocols to ensure that customer funds were not compromised.
Conclusion
The Bitfinex hack was a major setback for the cryptocurrency industry, as it undermined the security of digital currency exchanges and exposed vulnerabilities in existing security protocols. Despite the fact that Bitfinex was one of the world’s largest and most popular cryptocurrency exchanges at the time, it did not have the same level of security as larger financial institutions. In the aftermath of the hack, Bitfinex implemented a series of security measures to ensure that similar attacks would not occur in the future.