Understanding the Intricacies of Cryptocurrency Theft

Cryptocurrency has become a trend in recent times; there are countries where they are banned or restricted and at the same time there are countries where explicit use and trade of cryptocurrencies are allowed. Cryptocurrency is always in the news these days. Even as we get this story ready, there comes the news of Google deciding to ban all cryptocurrency-related advertising.

We’d very often use the term ‘Cryptocurrency theft’ without understanding the implications; the most notable thing about Cryptocurrency theft is that it basically involves not the stealing of someone’s cryptocurrency, but the cryptographic key. It’s this cryptographic key that leads criminals
on to laying their hands on transferrable currency., In fact, it’s this very same thing that works as regards stealing any other online asset.

Cryptocurrencies are not real!

Cryptocurrencies are not real, they are, after all, virtual currencies. They just don’t exist physically; they exist almost like a digital ledger (something akin to a checkbook ledger), which is in technical parlance known as the blockchain. It’s this blockchain that stores and manages the list (an ever-growing list) of addresses and the number of units of a currency that are there at those specific addresses. Thus any owner of any kind of cryptocurrency would actually be holding a cryptographic key and not the unit of the currency itself. It’s this cryptographic key that would allow the person to unlock the address where that unit is located.

Protecting the key is important!

As explained above, it’s the cryptographic key that any cryptocurrency owner would hold. Hence cyber criminals too would target getting the cryptographic key, which in turn would lead them to the open ledger- the blockchain. Hence it becomes important that the cryptographic key is protected. Yes, the focus should always be on keeping the cryptographic key secure and secret.

Understanding how stolen cryptocurrency gets converted

Once cryptocurrency theft happens, the criminals have to get a platform on which the stolen cryptocurrency can be transferred. The platforms that are used for this- mixers and tumblers- mix the stolen cryptocurrencies with those of other users and thus create a new transaction address. The result is that the blockchain gets confused and is not able to associate the stolen currency with the original addresses from which they were stolen. The criminals are careful enough to keep track of the cryptocurrency they transfer to the mixers and tumblers. They then use digital currency exchanges like Ripple or Coinbase to get the stolen cryptocurrency converted into other currencies. Those who do the exchange do it by opening an account in any of these exchange platforms, for which they would have to provide sensitive information. Sometimes these criminals don’t clear up their digital footprints and hence get discovered.