With the world wide web approaching its third phase, the web of 3.0, cybercrimes will become much more common, and I don't believe if its users are prepared.
On Sunday morning, I awoke to the news that Bit-Mart had been hacked, and the chief executive officer described it as a security breach. decrypt
For those of us reading this post and having no idea what Bitmart is, here is a simple explanation Bitmart is a tier two exchange that’s has most shit coins on its platform when I say shit coins. I mean a project which you can enter with a $ 100 investment. You are automatically a whale in that project space, it also has some stable tokens too.
In the early hours of Sunday morning BitMart confirmed that one of its Ethereum hot wallets was hacked , this was confirmed by chief executive officer and founder of the exchange Sheldon Xia with a tweet from he’s Twitter page.
Peckshild . Inc. is a blockchain security and data analyst company. took to their Twitter page to report immediately they notice this incident before the exchange( bitmart) did their confirmation in their tweet which stated that their Ethereum hot wallet had been compromised and then attached the transaction history tagging the bit-mart team.
Bit-mart on the other denied the allegations stating it was fake news that there was no such event such as that, so when they carried out an investigation in house and found out that the allegations were true. The team discovered that $100 million was lost on Ethereum(Eth) and $96 million on Binance chain (BSC) these are said to be estimated.
Which brings me to questioning myself about how these exchanges protect their blockchains and people assets?
When I tried opening a trust wallet account I was giving a seed phrase to either memorize it or to save in somewhere far from eye reach . The bit-mart hack made me ask myself, how do these exchanges protect themselves, their wallets from these attacks, do they use seed phrases too?
So I went to the web to seek answers. I discovered that exchanges have to wallets which are cold and hot wallets, which further explained to me that the hot wallets are where funds are kept for liquidity and this is opened to the public space while the cold wallets are to keep large funds safe.
Instead of using a combination of both hot and cold wallets a multi signatory system is provide where by three to five multi signatory addresses is assign to the client’s wallets and the master is controlled or in possession of the exchange. The process of creating these keys is called a key ceremony.
WHAT DO THEY MEAN BY THE KEY CEREMONY
A key ceremony is a process whereby computer networks are isolated from unsecured networks which literally means it is not connected to the public cloud, these systems can be wired or wirelessly, these computers generate five master public key pairs and these key pairs are stored in a private online server.
The five master keys generated can be auditable which means trans piracy, these key pairs are now used to create other key pairs. The private master key is assigned to transactions carried out within the exchange, if there is a hack directed at this exchange the hacker needs to have at least three of this master private key with is possible because they are placed in servers far from the reach of the internet and they are stored in different servers and at different locations.
So I asked myself if bit-mart is making use of this process of securing their assets?.