GK8, is said to be the world's best hack-proof system for safeguarding digital assets, they recently unveiled their proven technology for executing the entire digital-asset management process without any kind of Internet connection, effectively introducing the world’s first truly cold wallet. To demonstrate their disruptive technology, GK8 announced a bounty program that offers up to $250,000 in Bitcoin (that was about 28 Bitcoin) for the first person or team to hack their cold wallet.

Hacking of the Exchanges

Crypto exchanges are relatively new, compared to those in the traditional financial markets. It is a hotbed of competition that drives innovation and is attractive to criminals. Over 400 cryptocurrency exchanges exist and all are vying for a piece of the growing $200+ billion market. New features and updates are constantly modifying the software and technology infrastructure. More than six thousand unique digital coin and token assets exist and the scope of management complexity continues to grow for these online markets. With constant change, vulnerabilities are inadvertently introduced. 

Many of the exchanges have not matured, from a cybersecurity perspective, to properly validate, maintain, and defend their online services. Most of the sites focus on maintaining services and growing the user-base, with little attention to security. The race to establish themselves and be competitive has blinded them from investing in the necessary cybersecurity controls. 

At the end of 2019, South Korea’s Upbit, one of the biggest blockchain platforms in the world, was hacked by malicious actors and lost a staggering $49 million worth of tokens. Binance, too, infamously lost $40.7 to hackers in May; The list goes on. A staggering $4.26 billion in digital assets was stolen in the first six months of 2019 alone. 

Crypto hacks prevent Institutional entrance to blockchain

Institutional investors within the cryptocurrency space are continually faced with one hindrance or the other. From regulatory uncertainty to theft and volatility, tension usually runs high as the future of cryptocurrencies seems a little more uncertain every day. For now, security seems to be the biggest issue and investors require safe spaces to trade and securely store their digital assets.

GK8 Bounty program “Mission Success”

GK8 challenged hackers to crack the world’s first-ever truly cold wallet, offering a bounty of $250,000! While blockchain as a database is secure, blockchain as a service has vulnerabilities at its endpoints, where private keys can be stolen. GK8 tackles this problem by allowing financial institutions to execute the entire digital asset management process, including sending transactions to the blockchain, without any kind of Internet connection.

GK8’s daring bounty program event, which took place on February 3, at 9:00 a.m. EST, offered up to a quarter of a million USD worth of Bitcoin for the first person to hack their cold wallet to prove it’s impenetrability. During the 24-hour bounty program, every 24 blocks (about 4-5 hours per block), GK8 sent a real-time transaction to the address of the miner that closed the block in order to prove the livability and real-time activities of the cold wallet. 

“To prove our wallet is really active and live, from the minute we launch the challenge, every 24 blocks we will send a real-time transaction to the address of the miner that closed the last block,” says Shahar Shamai, CTO of GK8. “This bounty is the real deal.”

The wallet itself held approximately $125,000 worth of Bitcoin. In the event that someone was able to hack the cold wallet and provide a satisfactory explanation as to how he or she managed to hack into it, he or she would be entitled to receive the $125,000 worth of Bitcoin in the wallet. In addition, he or she was entitled to an additional prize of up to $125,000 worth in Bitcoin so that in total, he or she may have received was a grand total prize of $250,000.

A Bounty that failed

The most notable hack bounty that failed in recent years was Bitfi “the world’s first un-hackable cold storage wallet” and it was endorsed by the controversial John McAfee, in July 2018 to prove his point, McAfee announced a bounty of $100,000 that would go to the first person to hack the new device.

Within a week, hacking reports started to emerge. On Aug. 1, a crypto personality from the Netherlands OverSoft tweeted. We have root access, a patched firmware and can confirm the BitFi wallet still connect happily to the dashboard.” OverSoft later posted BitFi ROM directory listings. Needless to say there was a lot of controversies and they changed the bounty parameters, but continued to reinforce the idea that their service has not been “hacked.” “The bounty only covered a single attack vector and excluded back-dooring the device. 

The Importance of private key storage solutions that are un-hackable

Cryptocurrencies have put the power of finance back in our hands, but it also leaves us vulnerable to cyber-crime. With this in mind, it’s important to understand how to effectively keep your private keys safe from attack. A common means of storage for private keys are on your phone or computer. Whilst it is a convenient way to access and move your funds, it is considered a hot wallet. Attempting to keep your private keys safe by leaving them on an internet-connected device leaves you open to hackers, phishing scams, viruses, and other malware.

This is where GK8’s on-site digital asset custody system combines a hack-proofed digital vault with a new class of MPC that together implements an unprecedented level of risk assessment and mitigation, with institutional-grade compliance, seamless API integration, and low transaction fees. The technology allows financial institutions to receive high access to digital assets and related information without compromising on security, as it enables the institution to execute the entire digital asset management process, including sending a signed transaction to the blockchain, without a direct or indirect Internet connection.

As the technology develops and the markets mature, the need for dynamic and secure key storage solutions is paramount to the success of digital asset management for institutional investors. In today’s threat environment, multi-layer security is not nice to have but rather an essential must-have. GK8 is at the forefront of innovation in the digital asset management industry.