My Wallet was Hacked! Now What?

It's an investor's worst nightmare: a hacked Bitcoin wallet. Coin Pursuit looks at the harsh reality of account theft and the importance of security.

Unfortunately, one of the most popular aspects of cryptocurrency also presents a major vulnerability. Unlike a traditional bank account, where the money in the account is linked directly by name to the account holder, digital currency is not in any way linked to any one specific person. On the one hand, the anonymity this affords digital currency investors is one of the factors behind its broad appeal; holders of Bitcoins and other currencies don't have to worry about the spreading of their personal information to unwanted third parties. On the other hand, however, since “your” cryptocurrency holdings aren't directly linked to your name or address, if someone else gets their hands on it, well...it's no longer yours. It's just gone.

Alternative currency is recognized by unique codes assigned to that currency; each coin has its own code, and—once transactions break down coins into smaller fractions—those fractions carry their own codes, as well. Again, at no point is the digital currency attached in any way to any one person; we're repeating that because it's a very important point. “Ownership” of cryptocurrency is established by whoever holds the codes for it—and unfortunately, there's no distinction between currency that has been legally traded and coins that have been hacked or stolen. If you have the codes for the coins, that currency is yours, whether you came by it legally or not.

Therefore, if your wallet is hacked, you are—in the overwhelming majority of cases—out of luck. Those coins are no longer yours. Some cryptocurrency exchanges—especially if they're found to be at fault for the hacking of wallets stored on their servers—may reimburse all or part of the accounts stolen; however, this facet of the industry is not regulated, and full reimbursement is rare. We strongly recommend new investors to review our section on wallet security; by following the pointers outlined there, alternative currency account holders can take the steps necessary to avoid theft. These tips may be cold comfort if you've already experience a hacked account, but at the very least you can do what you need to keep it from happening again.


Next Wallets Topic: Offine Storage and Security

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