Sunday, February 25, 2018 by David Williams
People have touted bitcoin to be much more secure than most existing financial services. However, it’s not immune to hacks and other intrusions. A group of computer scientists has just shown how vulnerable Bitcoin can truly be, particularly when stored inside so-called hardware wallets that are meant to keep them safe in an analog form. The findings of these researchers have been made available by the University of Edinburgh.
According to the computer scientists behind the research, hardware wallets — gadgets that are created to manage personal accounts using Bitcoin as well as other cryptocurrencies — have certain security weak spots. This opens up their owners — that is, users of hardware wallets — to higher risks of losing access to their digital currencies.
The team of computer scientists carried out their in-depth security analysis at the University of Edinburgh. In particular, they focused on the messages sent between the hardware wallets and the computers used by the owners of the wallets in order to find out what they could glean from them. They did this by creating a simple piece of harmful software, which means malware, and used it as extensively as they could.
What the researchers found was that they were freely able to intercept the messages sent between the hardware wallets and the computers used by the users. That is, the privacy of hardware wallet users isn’t under any sort of high-level protection whatsoever. The researchers were able to show how easy it is to access Bitcoin funds managed by the hardware wallets, and not only that but ultimately divert them into a different account — or several.
As you can imagine, this is terrible news for anyone who had even the slightest bit of trust that Bitcoin is truly secure. According to Dr. Andriana Gkaniatsou, hardware wallets that are meant to be used for Bitcoin and other cryptocurrencies need to be closely examined. “A wallet should protect not only our money, but also our privacy,” she said. “It was surprising to discover how easy it is to access a user’s funds, even when sophisticated hardware is incorporated.”
But while the researchers may have been surprised by the results of their analysis, most people who closely follow the Bitcoin industry might not even bat an eye. There have been numerous reports of Bitcoin-related hacks and crimes over the years that it’s almost a routine occurrence at this point. The fact that it exists as a digital item should be reason enough to fear that it’s possible to manipulate far too easily and far too quickly. This new research just adds even more confirmation that Bitcoin can be inherently insecure under certain circumstances, and especially if used with typical hardware wallets.
The researchers attempted to look for possible ways to fix the problem of vulnerable hardware wallets. In the end, they settled on adding a layer of encryption that would protect certain messages sent between the hardware wallets and the user computers, which helped to make them much more secure than they initially were.
The researchers noted that the lack of a “silver bullet” will always be an issue when it comes to protecting digital financial assets like Bitcoin. But at least they found one working solution, and the good thing is that it can be applied to all models of Bitcoin hardware wallets to protect them from hacks.
Read more about the problems faced by Bitcoin users in BitcoinCrash.news.