Blockchain technology is often touted for its strength, stamina, and overall safety. The possibilities for blockchain to finally expand beyond crypto are finally beginning to show themselves, but the fact remains that blockchain is still a developing platform, and many kinks still need to be worked out.

This year, hackers made an estimated $878,000 from bug bounties. This is money not garnered from individuals’ wallets or coins kept in storage, but from the exchanges themselves.

Blockchain Needs Time to Build Itself

Following events such as Mt. Gox and Coincheck – two of the worst cryptocurrency-based thefts in history – many exchanges and wallet platforms are looking to improve their safety standards and keep their customers’ money secure. Occasionally, these exchanges are likely to find software bugs in their systems that could potentially be manipulated later by malicious individuals looking to get their fingers around money that’s not theirs.

What do these exchanges do? They pay hackers to enter their systems and fix the problems before they’re uncovered by the wrong people. They then pay these hackers for their services with what’s known as “bug bounties.” By August of this year, roughly $600,000 in bug bounties had been collected, though by December’s end, that number had skyrocketed to nearly $900,000.

The biggest “payer” of bug bounties was Block.one, which awarded over $500,000 to hackers that sealed off gaps in its code. In second place came U.S.-based exchange Coinbase, which paid over $200,000 in 2018, while Tron came in third, having paid over $76,000 in bug bounties.

A spokesperson for Hacker One explains:

“Nearly four percent of all bounties awarded on Hacker One in 2018 were from blockchain and cryptocurrency companies. The average bounty for all blockchain companies in 2018 was $1,490. That’s higher than the quarter four platform average of around $900. One of the top-paid crypto hackers earned seven times the median software engineer salary in their country respectively.”

Bitcoin and bitcoin cash were some of the biggest subjects of hackers’ affection this year, as Hacker One reports that both currencies suffered from “crippling vulnerabilities” in 2018. In addition, roughly 34,000 smart contracts on the Ethereum network were also vulnerable to malicious activity.

The Cycle Continues

Unless the blockchain is EOS, most transactions occurring via distributed ledgers are not reversible, which means once the money is stolen or gone, it is gone forever.

At press time, some of the companies still offering bug bounties to hackers willing to examine their systems include Augur, which is granting $200,000 in reward money to anyone that can uncover “critical issues” in its network.

Do you think bug bounties are a good idea, or could they somehow give hackers the wrong idea? Post your comments below.

Image courtesy of Shuttershock

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