What Is Hacking?
Hacking can be described as an act to compromise or manipulate computational devices or systems by finding weaknesses to test or exploit. Hacking is done for various purposes and ideological reasons, such as terrrorism funding, money laundering and sanctions evasion. For example, the notorious Lazarus Group, who has stolen billions in cryptocurrency, is believed to be a North Korean hacking unit.
There are different kinds of hacking, some of it for the greater good and others for more nefarious, criminal means:
“White hat hacking” seeks to improve security by finding and patching up vulnerabilities in systems, while “black hat hacking” seeks to attack systems for illicit purposes. The third kind is “grey hat hacking,” which also attacks systems through unconventional or unethical means, but isn’t meant for malicious purposes.
An example of a "white hat" hack in recent time is the $612 million hack of Poly Network, a cross-chain protocol. Few days after the heist, the white-hat hacker announced the return of the funds and branded himself "an eternal legend."
A recent "black hat" heist is the $90 million hack from Japanese exchange Liquid, where funds were stolen from their warm wallets — a bridge between their internet-connected hot wallets and offline cold wallets.
Hacking has a particular importance in the study, design and exploitation of cryptocurrencies, since the basic premise of blockchain is to help users opt out of the traditional system and its assets.
Hackers have long devastated the crypto industry, stealing billions of dollars annually from exchanges, custodial services and wallet software users who keep their assets on “hot wallets” connected to the internet.
Some of the most notable hacks in crypto history are Mt. Gox (2014), Coincheck (2018) and Bitfinex (2019). Hackers often employ malicious spyware (malware) and viruses through phishing techniques to breach security systems or get users to unwittingly reveal their private crypto credentials. Find out more in our comprehensive list of the largest crypto hacks in history, and what happened to the affected exchanges since.
