By Jenny Lynton
To be honest, we’re hooked. Well, Bitcoin (BTC) has steered us through a rollercoaster of emotions recently, as its value whipsawed across the market. Then this week, just as the coin rallied higher and momentum was rising, the bears came back to haunt us.
One of the key reasons behind the latest market plunge is the fallout from South Korea’s notorious Coinrail cyber-hacking scandal. South Korean exchange Coinrail was hacked, losing around £28 million. The event ignited a chain reaction across the industry and the issue of crypto-hacking has once again taken center stage. Nevertheless, some top security providers aren’t deterred. Marc Laliberte, a threat analyst at network security solutions provider WatchGuard Technologies pointed out that ‘crypto mining is in its infancy. There’s a lot of room for growth and evolution.’
With this is mind, we tapped into the CoinWatch Platform and News Sentiment features to gain some deeper insights and unravel the reasons behind the latest bear-run. We also weighed in to see any glimpses of hope on the horizon.
Bitcoin Market Watch
Bitcoin is often seen as a benchmark for the crypto industry, so when the coin jumps, the market stands to attention. From the CoinWatch Platform we can see that last week Bitcoin rose to $7,627. However, the coin then met resistance and sharply nosedived to $6,744. In similar fashion, the second leading altcoin Ethereum (ETH) peaked at $599 on June 8, before joining the market tumble and diving to its current value of $479.
Crypto-Jacking Send BTC Plummeting
The crypto-industry is no stranger to scams. In fact, over the last year the markets have been plagued by a succession of crypto-attacks, cyber-hackings and de-listings. However, the latest scandal seems to be more serious. Coinrail attempted to put a media band aid over the scandal and reassured investors that ‘seventy percent of total coin and token reserves have been confirmed to be safely stored and moved to a cold wallet’. Coinrail added that they are ‘looking into it with an investigative agency, related exchanges and coin developers.”
Despite Coinrail’s encouraging efforts, it seems the damage had already been done. The news sent the markets spiraling, with Bitcoin plummeting and taking some altcoins down for the ride.
However after the event, a number of coin experts highlighted how Bitcoin was not actually associated with this hacking debacle. Mati Greenspan, senior market analyst at eToro assured investors that ‘the narrative that such a small hack caused such a large price reaction has definitely been overplayed’. Greenspan also brought to light that ‘bitcoin’s drop on Sunday was caused by a technical correction’.
If this is the case then it does tie in with the idea that one bearish scandal for crypto can spark a monumental chain reaction in the market, starting with Bitcoin. So even after so much groundwork has been done to try to regulate the industry, prevent cyber-attacks and inspire crypto-confidence, a comparatively small hacking like this is enough to spark a market tumble.
The latest hacking also shifts the spotlight to one of the major flaws with the industry. Since the currency is digital there will be a constant battle between newer, innovative technology to prevent cyber-attacks and increasingly complex ways to crypto-jack. Indeed,this year has seen the relentless rise of crypto-jacking, described as the ‘unauthorized use of someone else’s computer to mine cryptocurrency’. In November 2017, Adguard reported that ‘crypto-jacking surged in popularity and grew by 31% in a month’ and that number is only set to spiral.
But Is There A Bullish Horizon?
Going forward, WatchGuard Technologies threat analyst Marc Laliberte recommends that one of the most effective solutions for the industry is to take even further ‘steps to minimize the risk’. The analyst recommends incorporating ‘crypto-jacking threats into general security awareness training, focusing on phishing-type attempts to load scripts onto users computers.’
Laliberte is a firm believer that ‘training will help protect when technical solutions might fail’. The analyst also recommends that organizations should implement a host of measures to protect hackings, such as installing ad-blocking software and endpoint protection.
While the industry scrambles to outsmart the hackers, it could be argued that the crypto industry is still in its infancy, so hacking issues are part of the package and simply ‘teething problems’. For instance, many users were initially skeptical of transferring money online through sites like Paypal. However, with the onset of encrypted technology and tougher industry regulations, this inspired consumer confidence and Paypal is now seen as one of the most secure ways to transfer money online.
In some more bullish news for Bitcoin, US Commodity Futures Trading (CFTC) Commissioner, Rostin Behnam affirmed this week that ‘Bitcoin and cryptocurrencies are here to stay’. So, in spite of these current hacking issues, Benham believes that Bitcoin can eventually find a solution and become more stable. He added how it’s only a matter of time before, crypto will ‘become a part of the economic practices of any country, anywhere.’