Leading bitcoin exchanges report that they have suffered from cyberattacks this week.
On Monday, BTC-e exchange said its systems were attacked, which resulted in the website temporarily going down. The news was announced in the tweet that was later deleted and the website showed trades going through.
The next exchange that appeared under the threat is Bitfinex that yesterday informed about distributed denial-of-service attacks, or DDoS, that attempted to paralyze the system with a flood of information.
The attack followed a similar one occurred on Tuesday morning. Bitfinex needed one hour to solve the problem and the exchange returned to regular operation.
Chris Burniske, blockchain products lead at ARK Investments, explained that the attacks are “not surprising” taking into account the bull cryptocurrency market. “There’s a big difference between a denial of service attack, and a hack that causes clients to lose funds,” he said. “As of yet, we’re fortunately not seeing any of the latter.”
Indeed, we currently observe unprecedented boost of investor interest and record-breaking levels of fundraising for new cryptocurrencies. Experts are concerned that the largely unregulated cryptocurrency industry might not be able to manage the hype.
“Investors with assets on centralized cryptocurrency exchanges should be careful. The track records of these organizations are not good, and as the assets on the exchanges grow, so does the bounty for attacking or hacking them,” said Benjamin Roberts, co-founder and CEO of Citizen Hex, a digital currency trading start-up backed by three Canadian venture funds.
Roberts as well as other digital currency analysts warn that cyberattacks can allow the attackers to manipulate the bitcoin market. Since several major exchanges located around the globe set the bitcoin price, temporary disruption of a single exchange can allow a trader to take advantage of price differences.
The second popular cryptocurrency, Ethereum, has surged several thousand percent in that time.
“A speculative frenzy is never a good thing. I don’t think we’re there right yet,” Adam White, Coinbase vice president and general manager of its GDAX exchange, told CNBC in a phone interview. But “I do think the ICO or token generation events have … maybe a bit too much enthusiasm for them.”
When Bitfinex officially announced the IOTA token the other day, the transaction volume skyrocketed so that the servers briefly went down. “Moments after the IOTA launch,” Bitfinex representative Brandon Carps shared, “we were all hands on deck to load balance and ensure IOTA trading was back online and operating as expected.”
Remarkably, 4.44 Million Mega IOTA was traded with the IOT/USD pair only for the first three hours of trading. Even greater activity was observed in the IOT/BTC trades – 11.67 Million Mega IOTA was traded for the same time period.