The Justice Department on Monday reported it successfully retrieved $2.3 million in bitcoin paid by Colonial Pipeline to ransomware hackers in April.
But the news caused a stir of confusion online — some speculated that bitcoin was “hacked,” and on Tuesday, the price of bitcoin seemed to slide due to concerns over security of the cryptocurrency.
Though it isn’t exactly clear how it was done, experts say the FBI’s ability to retrieve the bitcoin ransom was due to the criminals’ storage of their private keys, rather than any vulnerability with the cryptocurrency itself.
Private keys, or a string of letters and numbers similar to a password, are used to unlock access to a holder’s cryptocurrency. In turn, it’s extremely important that your private keys remain undisclosed to the public.
“Anybody, anytime, that gets a private key can move funds,” Parker Lewis, head of business development at bitcoin custody and loan firm Unchained Capital, tells CNBC Make It. “The only way that funds can be moved is if you have the private key, and that’s why securing private keys is so important.”
According to the Federal Trade Commission, nearly $82 million was reported lost to crypto scams during the fourth quarter of 2020 and first quarter of 2021. That is more than 10 times the amount from the same period the year before, the FTC reported.
To protect your crypto from hackers or any outside threat, it’s important to understand the type of wallet options available and how