Perhaps bitcoin wallet developers should avoid labeling their devices as “unhackable.” According to Coin Telegraph, cybersecurity pioneer and cryptocurrency enthusiast John McAfee, the executive chair of wallet creator Bitfi, previously termed his company’s invention “the world’s first unhackable gadget.” McAfee even challenged security professionals to hack the gadget, offering a $100,000 payout as of July 24. However, McAfee may have spoken too soon: a group of researchers seems to have successfully hacked the “unhackable” wallet.
Bitfi’s gadget is a hardware wallet, which means it is a tangible item that bitcoin investors may touch in their hands rather than a digital storage device. The wallet supports “an infinite number of cryptocurrencies” and use a user-generated secret phrase rather than the traditional 24-word mnemonic seed. Furthermore, Bitfi claims that their wallet is “fully open-source,” which implies that the user retains ownership of the cash saved in the wallet “even if the wallet’s maker no longer exists.” For all of these reasons, the Bitfi wallet seems to provide a very appealing experience for security-conscious cryptocurrency investors.
Many teams tried to hack the wallet, but none were successful in circumventing the security safeguards mandated under the reward rules. Then, on August 12, a team of researchers claimed they could successfully transmit signed transactions using the wallet, fulfilling the reward program’s rules. They had to alter the gadget, connect to the wallet’s server, and then utilize it to send sensitive data.
It seems that even a “unhackable” wallet may be successfully hacked in around three weeks.
Part of the breach team’s security researcher Andrew Tierney speculated that “we have transferred the seed and phrase from the device to another server, it simply gets sent via netcat, nothing fancy.” Tierney went on to say “We were able to intercept conversations between the wallet and [Bitfi]. This has enabled us to show amusing messages on the screen. The interception isn’t the main point; it’s only to show that it’s linked to the dashboard and still works despite considerable changes.”
Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) is very dangerous and speculative, and this article is not a suggestion by Investopedia or the writer to do so. Because every person’s circumstance is different, a knowledgeable specialist should always be contacted before making any financial choices. Investopedia makes no guarantees or warranties about the accuracy or timeliness of the information provided on this site. The author owns bitcoin and ripple as of the day this post was published.
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