Bitcoin and Ethereum reached new all-time highs, prompting some prominent investors to make bold predictions. Mike Novogratz, a hedge fund manager, has argued both cryptocurrencies could triple in val
Bitcoin and Ethereum reached new all-time highs, prompting some prominent investors to make bold predictions. Mike Novogratz, a hedge fund manager, has argued both cryptocurrencies could triple in value by the end of 2018.
The momentum has drawn unwanted attention. As prices surge, hackers intensify their probing of centralized exchanges. They search for wallet backup files and archives—Copy.dat, wallet.dat, wallet.dat.1, wallet.dat.zip, wallet.tar, wallet.tar.gz, wallet.zip, wallet_backup.dat, wallet_backup.dat.1, wallet_backup.dat.zip, wallet_backup.zip—hoping to extract the private keys stored inside and drain accounts.
Bitcoin broke through $11,000 this week. Didier Stevens, a security researcher who tracks these patterns, noticed the timing. "I've seen a couple of such requests a couple of years ago, but it's the first time I see that many," Stevens said. "The first time I observed this was late 2013, in the middle of the first big BTC (bitcoin) price rally."
The correlation is clear: market confidence attracts criminals. When prices climb and traders feel bullish, hackers ramp up their operations.
For investors, the problem runs deeper than timing. Centralized exchanges operate as custodial platforms, meaning the exchange owns the private keys and holds the funds on behalf of users. This concentration of assets makes exchanges prime targets.
Two major exchanges learned this lesson hard. Bitfinex and Bithumb both experienced serious security breaches in the past year. Bitfinex lost more than $70 million to a single attack. Unable to cover the loss, the exchange imposed a 30 percent haircut across all user balances. Bithumb suffered two breaches, though both were significantly smaller. The exchange had sufficient capital to reimburse affected customers without requiring them to absorb losses.
The solution requires a shift in behavior. Investors should treat exchanges as trading platforms only, not storage vaults. Moving coins into non-custodial wallets—platforms where the holder controls the private keys—removes them from centralized vulnerability. Even then, security lapses matter. As hackers grow more sophisticated and more numerous, protection measures become essential.
Two-factor authentication should be enabled on every account. Multi-signature protocols and hardware wallets provide additional layers of defense. None of these steps offer perfect protection, but they substantially reduce the risk that hackers can steal funds.
