“Broken Arrow” – Leading Exchange Hack Black Swan(s)steemCreated with Sketch.

in #blackswan4 years ago (edited)

Longtime readers know I am bullish on cybersecurity simply because it does not yet exist. Cybersecurity is the single most exciting area of high tech because everything our modern society operates on is somehow linked to the cyber world, and the market for cybersecurity is still in its infant stages with no clear, emerging winners.

“There are only two types of companies: those that have been hacked and those that will be.” – FBI Director Robert Mueller (2012)

Everything we know and take for granted is exposed to exploitation by any individual or collective group with the technical and practical knowledge on how to do so. I want you to truly reflect on this because everything from water supply to electricity to communications is exposed to cyber exploitation, and once basic utilities go so does everything associated with it from a social perspective.

With the emergence of state-sponsored hacking tools being released to public domain, it is apparent that offenses are much better equipped than existing defenses.

Cybersecurity defenses are a reactionary force; a breach is only recognized once the offensive force has breached and escaped, more often than not without detection. In other words, cyber is a defenseless space because those who have the resources and drive to exploit via enhanced offensive techniques can have their way with defenses that are reactionary.

NY Times wrote an article that warrants reading on what our national cybersecurity forces are up against.

Full Article

Right now, the problem is that cybersecurity is perceived to be a defensive industry, yet it has shown us repeatedly that cybersecurity defense is lagging cyber offense techniques. The reason for this is simple: there’s more money to be made in offense than defense.

Yet, we now stand at a point in time where this narrative is shifting. Defense is becoming less about making sure emails cannot be stolen and more of a necessity for a functional economy, infrastructure, and even a nation-state as we know it. As I stated earlier, cybersecurity is the security force that stands between the “evil”, exogenous forces, and our functional society. Unfortunately, the "evil", exogenous forces have the upper hand.

Not only that, but we now stand at a point where everyone is so vulnerable that anyone can hack into anyone's personal affairs, it does not necessarily have to be a computer-savvy expert. All sorts of hacking kits and phishing schemes are for sale online nowadays, meaning that anyone can hack anyone if they have the will to do so.

This applies to everyone who has any sort of online presence, which is everyone. You are exposed, even if you think you are not, and this applies especially to cryptocurrency investors.

I picture the state of cyber much like this clip from We Were Soldiers, it’s a broken arrow situation of utter chaos. Be advised clip consists of military combat.

I have long felt that a hack of Coinbase was inevitable, simply since no defense has proven impenetrable, not even that of US Military Cyber Command. If our most sophisticated cyber experts are unable to secure assets and information, what makes you think that a bunch of private citizens working at a startup are any more capable? Throw into the mix that the incentive to hack Coinbase is simply too large to ignore now following the rise in value of digital assets, and it appears quite clear that a cyber Black Swan event is due.

Scary, I know, but the moment we realize that we are all exposed is the moment that we realize all we can do in this environment is make sure we are not the low hanging fruit. Make yourself as difficult to hack and exploit as possible.

For investors looking to enter the crypto marketplace, I highly recommend you revisit my How To Post, here.

While I have been perusing the traditional beginning of 2018 market predictions, mine is straightforward:

Coinbase will experience a major breach inside of 12 months.


The ramifications when this occurs are anybody’s guess. Undoubtedly, the broad crypto market will decline substantially, and only those who fully understand the space and its history will survive; those who comprehend the importance of taking personal responsibility for securing one’s own assets, private keys, security phrases, etc.

If you have yet to do so already, now is a time to take some profits off the table and purchase yourself a hardware wallet. Trezor and Ledger are just a few of the options I recommend you research further on your own.

DISCLAIMER : This content is for informational, educational and research purposes only. This post is not to be taken as personalized investment advice.

If you found this interesting, please up-vote and chime in via the comments. If not, feel free to forward this to your frenemies.

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*Revising the thought-process here since Coinbase only keeps 1% of customer funds in hot wallets, the rest in cold storage. Not to mention the exposed 1% is fully-insured. Coinbase is an impressive organization thus far. Read more.

However, the underlying thesis of exchange breaches proliferating and resulting in larger losses remains intact. Coinbase serves as the industry proxy, yet, I no longer think they will be the weak link. Time will tell!