Cryptocurrency and related activities have attracted the attention of many cybercriminals. In most cases, these criminals go after exchange users or online wallet services. However, they will target any other service which stores Bitcoin balances at some point. In the case of Nicehash, a security breach took place this week, and its Bitcoin wallet has been emptied. This is another major blow for the Bitcoin ecosystem as a whole.
Nicehash Hack is a Major Setback
Most cryptocurrency users will have come across the Nicehash platform at some point. It was one of the first public marketplaces where anyone could buy and sell their excess mining capacity for any cryptocurrency. These marketplaces have become quite popular in recent years, as most people don’t have the space to mine cryptocurrencies at home. Companies such as Nicehash specialize in connecting buyers and sellers in this regard.
Unfortunately, they are also centralized services and a point of weakness. More specifically, Nicehash is a website which controls payments on behalf of users until the agreed-upon mining contracts are fulfilled. Moreover, it is responsible for handling refund requests, which means a lot of money flows through its wallets on a weekly basis. It was only a matter of time until hackers decided to attack this platform, which is exactly what happened earlier this week.
According to the official communication, Nicehash suffered a major security breach. Not only did someone gain access to the platform through illicit means, but he or she was also successful in his or her attempt to compromise the company’s Bitcoin wallet. A lot of money was stolen as a result, although the company itself never disclosed any information in this regard. Posters on Reddit claim this address is where all the money was transferred. At the time of writing, those bitcoins were worth over US$70.67 million.
It is not the first time the Bitcoin and cryptocurrency ecosystem has suffered from such a massive hack. Although things had quieted down somewhat in recent years, the year 2017 has not been overly positive in this regard. This is another dark page in the history of Bitcoin, although the currency itself has never been affected by such hacks. Every single incident has concerned a centralized entity providing Bitcoin-related services being hacked due to bad security precautions or insufficient countermeasures.
The big question is whether or not these funds will remain locked in the wallet linked above, or converted to other currencies eventually. Right now, the money is not moving an inch, although that isn’t exactly surprising. Once people discovered the address to which these funds were sent, it immediately got “flagged”. We can only hope that no exchange, broker, or mixer accepts any transactions from this address. The best course of action would be for the hacker to send the money back without too many questions asked, but that is an unlikely outcome.
For the time being, the Nicehash team is working with local authorities to investigate this theft and attempt to recover the money. All services will be resumed without too many problems, but the company has yet to fully disclose the cause of this security breach. All users are advised to change their passwords in case of any future mishaps. It is a very unfortunate incident for Nicehash and its users, but it’s one that was coming sooner or later. After all, centralized entities are a weak link in the world of decentralized cryptocurrencies.
