Exclusive: Hacks are caused by lack of common sense security best practices Is that possible?

The majority of hacking incidents that involve cryptocurrencies and initial coin offerings (ICOs) are the result of “sheer stupidity” on the part of some companies and their executives, according to Zachary Piester, co-founder and chief development officer of Bitcoin and Ethereum venture studio Intrepid Ventures.

In an exclusive interview on the sidelines of the Blockchain and Bitcoin Conference held in Manila, Piester told Cryptovest that hackers were able to bypass the security of targeted companies because the latter did not have tight control over their defenses.

“These (hacks) are fundamental stupid stuff,” Piester said of ICOs and cryptocurrency companies that have fallen victim to hacking operations. “There were bugs in their codes. Their software has not been audited. Some of the companies knew they have problems, but they still chose to launch [their ICOs] anyway."

$1.2 billion in Bitcoin and Ether lost to hackers

Piester was reacting to reports that hacking incidents are becoming common in the cryptocurrency space and investors are starting to notice and lose confidence.

An independent study by Autonomous Research (AR) showed that hackers stole an estimated $1.2 billion in Bitcoin and Ether in less than ten years. Lex Sokolin, fintech strategy director at AR, said the estimate did not factor in the rise in cryptocurrency values during the explosive growth in late 2017. “It looks like crypto hacking is a $200 million annual revenue industry,” Sokolin was quoted as saying.

A separate study by accounting firm Ernst & Young said that more than 10% of the $3.7 billion raised in ICOs, or nearly $400 million, had been stolen by hackers or lost. It added that as of November 2017, an average of $2 billion had been lost by cryptocurrency exchanges to hacking, but the blockchain technology is not capable of reversing the illegal transactions.

Although this technology is solid and would require an incredible amount of computing power to throw into disarray, the same cannot be said about the applications and organizations that help people manage their cryptocurrency funds.

Making matters worse for the blockchain community is the statement by Lee Chen, founder and CEO of cybersecurity firm A10 Networks, who said that the cryptocurrency hacking trend would intensify in the coming years.

“I think the digital transformation is the underlying motivation for hackers… So, expect the frequency, the size, the volume of hacks to continue to increase in 2018,” according to Chen.

Always ask about the company’s security team

Piester said the rule of thumb for investors should be to check on the security team of any company offering an ICO.

“They should always ask who the security team is. Who is the designated team, internally or externally, who is managing the company’s security? Not just for the project, but for the entire operations of the firm,” he said.