There has been a massive increase in cases of cyberattacks in the crypto landscape due to the increasing adoption of virtual assets across the globe. According to ImmuneFi, as of August, the crypto market has lost more than $1.2 billion in 2024.
To an extent, the growing cases of hacks have compromised the integrity and security of cryptocurrency, which further discourages investors from investing in digital assets. Hence, for individual and institutional investors, it is essential to be familiar with some of the common cyberattacks in the crypto space and how to prevent them.
In this article, we will dissect 5 of the most common cyberattacks in the crypto market and a few tips on how to prevent them.
Top Common Cyberattacks in the Crypto Sector
Phishing Attacks
Phishing attacks is one of the most widespread forms of cyberattacks in the crypto sphere. Cyberattackers mostly use deceptive mails, messages and websites to imitate legitimate service and mislead users into disclosing their seed phrases, passwords and other crucial login details.
Upon gaining the aforementioned credentials, hackers will have access to the users’ portfolios and steal their assets. To avoid falling victim to a phishing attack, investors must be vigilant and always verify the source of unsolicited messages.
Most importantly, users must always confirm the authenticity of email addresses and web domains before disclosing crucial information. Also, investors should use two-factor authentication to add an extra layer of security and make it difficult for bad actors to exploit their wallets.
Ransomware Attacks
More so, Ransomware attacks are another common cyber threat in the digital assets sector. This form of exploit involves the hacker encrypting the data of their victim and demanding payment in cryptocurrency before they restore access.
Hackers mostly deploy this means due to how cryptocurrency transactions offer anonymity, making it difficult for enforcement agencies to trace them. To tackle ransomware attacks, investors must stay vigilant, and have a strong data backup system while updating their antivirus software at intervals.
However, organizations can also assist individuals in combating this type of attack by introducing strict access control and network segmentation that can help reduce the effect of any breach.
Exchange Hacks
Cyberattackers now focus on cryptocurrency exchanges due to the voluminous amount of virtual assets in their custody. Recently, hackers have been on a spree with exchanges like Indodax, WazirX, and Lykke among their top-profile victims.
Most of these hacks claimed a huge chunk of users’ deposits which eroded their confidence in these crypto trading platforms. Most times, hackers often capitalize on vulnerabilities in the security system of exchanges. Also, they can sometimes gain access to crypto exchanges by using social engineering tactics.
Therefore, it is advisable for investors to choose a crypto exchange with a strong security system and good asset management style like storing users’ assets in cold wallets, constant security audits, and good insurance policies.
Additionally, investors should always do well to store their assets with hardware wallets and activate withdrawal whitelists. In support, crypto exchanges must frequently carry out security training for their staff while implementing sophisticated security protocols.
Smart Contract Vulnerabilities
Smart contracts are self-executing contracts with some terms of agreement incorporated directly into code. Without a doubt, smart contracts offer innovative solutions and automation in blockchain transactions.
However, smart contracts with bad codes or poor audits can lead to exploits as cyberattackers can manipulate the contract and inflict huge financial damage on investors. To protect users against these threats, developers must do well to carry out stern code audits and security checks before deploying smart contracts.
Also, contributing third-party security firms must carry out a penetration test to discover any bug the development team may have ignored. The project team should always carry out a constant check on its protocol and put in place a swift response mechanism to combat possible threats.
51% Attacks
51% attack requires a group of people to take over more than half of a blockchain network’s mining power. By controlling a significant portion of the network, the bad actors can manipulate the blockchain, double-spend coins, or stop the completion of a transaction.
This type of cyber breach is common among smaller and less secure blockchain networks. Thanks to advancement of the sector, most networks can now mitigate 51% attacks by implementing a strong consensus mechanism and a diverse allocation of mining power.
Further, community awareness and involvement in the governance of the project can help discover unusual mining activities. By that, the blockchain can easily repel any possible threats.
Conclusion
Despite how the digital assets space is nearing mainstream acceptance, cybersecurity has continued to play a huge role in reshaping the future of the market. To maintain the integrity of the crypto sector, every participant must understand all the cyberattacks that are militating against the advancement of the industry.
These cyberattacks can be stopped by embracing simple proactive prevention strategies. Some of these strategies are consumer education, constant audits, and adopting some industry-standard security systems.
Lastly, it is the collective responsibility of developers, investors, users, blockchain security firms, crypto exchanges, and many others to combat cyberattacks in the digital assets landscape.
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