The innovative solutions offered by Bitcoin Vault’s three keys will put an end to theft in the crypto space, offering users an opportunity to cancel transactions before it’s too late.
Cryptocurrency theft has become a relatively common occurrence, with incidents being reported every few days. In fact, according to blockchain analytics firm CipherTrace, thieves, fraudsters and malicious hackers made USD 1.36 billion in the first five months of 2020. In all of 2019 a record USD 4.5 billion was stolen.
The dangers are real and today we will be examining three such thefts that could have been prevented had the victims made use of BTCV’s three-private-keys structure.
The Munford case
After several years of watching cryptocurrencies boom, BBC reporter Monty Munford finally decided to invest his hard-earned money in Ethereum in 2017. He purchased crypto for roughly GBP 25,000.
When the price of ETH rocketed, he was sitting on a decent amount of money, and he even considered it to be his nest-egg for a pension. But to his horror, when he accessed his account to check his earnings in early 2018, he found that everything he owned had been taken and his wallet was empty!
Munford had been given two private keys to access his account, one public key and one private key both of which had 40 random numbers and letters. His digital wallet crew had told him to write down his private key and store it securely with other financial documents. So, he printed it out but ironically also stored it in his Gmail drafts folder, which would make it easy for him to copy paste the key whenever he needed to.
If Munford had been using the three-private-key structure, he would have received an immediate notification about the transfer. Alerted by the notification, he would have been able to reverse the transaction using the Cancel Transaction Key within 24 hours of the fraudulent transaction. Such cases may be common, but it is also up to users to take necessary precautions like never saving the passcodes online. After all, the crypto space has become a playground for all kinds of people, from good to point-blank evil.
Kathrine’s crypto caper
In January 2018, an Australian woman Kathrine Nyugen hacked into the crypto-exchange wallet of a 56-year-old man with the same surname, locked the account, and stole XRP worth USD 100,000. The stolen currency was sent to a Chinese cryptocurrency exchange and exchanged for Bitcoin.
Several days later when the man accessed his account, he found that his wallet had been emptied and his money was gone.
If the man had been using BTCV’s three key structures, then Kathrine Nyugen would have needed access to the first and third key to make an instant transaction. This is highly unlikely as both these keys are stored offline in separate files to prevent such thefts.
Although the Kathrine was later arrested and sentenced for the theft. The theft itself could have been prevented if the user had been using BTCV’s three-private-key structure, as
Mr Nyugen would have received an automated notification, allowing him to cancel the transaction as soon as he found out about it. This would have allowed him to recover his savings.
The curious case of the PlusToken Ponzi Scheme
The PlusToken Ponzi scheme was one of the biggest schemes of 2019 where over BTC 187,000 went missing.
It was a get-rich-fast scheme that tricked even the cleverest of investors into parting ways with their digital gold. Disguised as a high-yield investment program, the platform administrators closed down operations in June of 2019.
The fraudsters withdrew over USD 3 billion worth of cryptocurrencies (Bitcoin, Ethereum and EOS) and left the message “sorry we have run”. This led to an international chase for the administrators and creators of Plus Token. The token has been blamed for causing Bitcoin price fluctuations in 2019 as stolen funds were sold via Bitcoin OTCs and scam victims tried to cash out at the same time.
In the case of Ponzi schemes, users willingly send money to fraudsters, however, the three keys of BTCV can come handy when users have made the transfer but are still uncertain about their decision, or have made a transaction and later find out that the company that they trusted looks shady. By default, BTCV gives users a window of 24 hours to cancel or reverse any transaction that they make.
Stopping cryptocurrency thefts will always depend on how ingenious the crooks become. But, even though users cannot stop such attacks from occurring, the three-private-key structure gives them power over their funds. It not only secures their wallets but also allows them to cancel unidentified transactions and recover whatever amount they could have lost.