IOTA Criticized for Deficient Wallet Security After $4m Hack

IOTA, the network behind the 11th most valued cryptocurrency in the world by market cap (MIOTA), has come under great scrutiny on social media and web forums. The technology behind the project is being blamed for allowing an obvious hack which cost users about $4 million, as related by reports.

The outrage is especially due to the fact that just this past December, IOTA went on overdrive touting its partnership with Microsoft. Investors are now rather infuriated that the company’s purported partnership with technology giant Microsoft might after all be just a farce.

The IOTA wallet obliges users to autonomously create their own seeds (private keys). A lot of consumers have depended on online key generators to do this, such as iotaseed.io.

Should an individual malevolently hack into the online generator, then they could simply amass all the seeds IOTA users were being paid from. They could then wait for the best time to strike.

This is what actually happened last Friday night, when a lot of stolen seeds were fraudulently transferred after an apparent hack of IOTA’s computers. Simultaneously, whoever was behind the theft had prearranged a distributed denial of service (DDoS) attack against some of the most popular IOTA full nodes, successfully preventing the victims from recovering their monies altogether.

Despite the fact that IOTA enthusiasts believe that the company’s systems are flawlessly secured and that there are no bugs with the technology itself, critics aren’t buying that line of thinking. For them, relying on end users to create the seeds is seen an easy attack trajectory asking to be exploited by trouble makers.