The growing popularity of cryptocurrencies has prompted hackers to devise new techniques to target the blockchain technology. Read on to know more about it…
Blockchain technology underpins cryptocurrencies, which are considered unchangeable. The surge in popularity of cryptocurrencies, on the other hand, has prompted hackers to devise new techniques to attack the underlying blockchain technology.
One of new methods of cryptocurrency attack is the ‘51% attack’ which has grown in popularity in recent years. Recently, there have been numerous 51 percent attacks. After an attack in August 2021, the value of Bitcoin SV (BSV) dropped by around 5%. In 2019, another Bitcoin fork, Bitcoin Gold (BTG), was hit by a 51% attack. After the historic DAO hack in 2016, Ethereum Classic (ETC) diverged from the original Ethereum blockchain, it has been subjected to 51% attacks on many occasions.
A Reality Check on Statistics of Cryptocurrency Market & Breaches
According to a research released recently, as the sector grows to a valuation of more than $2 trillion — breach and fraud cases in the cryptocurrency market are approaching their greatest level this year.
So far in 2021, there have been 32 hacking and fraud incidents worth a total value of $2.99 billion. According to Crypto Head, which collects information and writes guides about the cryptocurrency market, that amount is on track to break the 38 cases tallied in 2020, signifying a 40.7 percent increase from 2019.
Wallet and exchange breaches are the most common sort of attack, accounting for 126 in the previous ten years, outstripping attacks and fraud involving DeFi, or decentralised finance, which account for 41 each. James Page, a Crypto Technical Writer at Crypto Head, wrote “However, the number of DeFi breaches is on the increase, with this new technology more open to potential weaknesses,”
Breach and fraud have resulted in the theft of $19.2 billion in the last ten years. Bitcoin is the most commonly hacked and targeted cryptocurrency, accounting for 33.3 percent of hacking and fraud cases. Following a selloff, bitcoin, the world’s most traded digital coin, was re-approaching $1 trillion last month. According to CoinMarketCap.com, Bitcoin accounts for around 43 percent of the cryptocurrency market, which has grown in value to $2.1 trillion this year. Ethereum is the second-most-targeted cryptocurrency, with 36 breaches (12.8 percent) over the last decade.
With 17 hacks and fraud instances, the United States is the most frequently attacked country, followed by the United Kingdom and South Korea, with 12 and 9 incidences, respectively.
Although 2021 may establish a new peak for the number of breaches, hackers made the most money in 2017, stealing an average of $223.5 million and a total of $4.7 billion. According to Crypto Head, Mt. Gox had the largest hack to date, with $615 million stolen over the years, resulting to the platform’s insolvency in 2014.
Best Security Practices
By improving security processes, such attacks can be minimized and it comes at various levels. Here are some expert-recommended techniques for minimizing the risk in decentralised finance (DeFi):
* Two-factor authentication: To protect your transactions, always use a two-factor authentication solution. This will give your wallet/exchange an extra degree of security.
* Wallet management that works: The majority of your money should be kept in multi-sig cold storage wallets that are secure. Hot wallets, which automate withdrawals, should have the bare minimum of funds because they are the most vulnerable to hacking.
* Keep your wallet addresses separate: You reduce your risk of losing money by using different wallet addresses for each platform. Even if one platform is compromised, the other is unaffected. Don’t keep all of your tokens in one wallet.
* Keep an eye on your wallet approvals on a regular basis: If you are no longer staking in a DeFi project, remove the project’s access permissions from your wallets.
* Avoid clicking on phishing links: Ideally, these are malicious adverts or emails that imitate affiliated organizations/identities in an attempt to obtain your personal information for hacking. Add mandatory two-factor authentication checks for sensitive operations at the application level.
Concluding Words
Unbreakable cryptography and a private key is a string of letters and numbers that serves as an identification code for each crypto account holder — secure each crypto account. However, hackers have demonstrated that blockchains are not uncrackable.
Someone can hack a poorly constructed smart contract by providing it specific instructions. In other words, while the smart contract can be hacked, the blockchain cannot.
If hackers gain access to a wallet, they can crack the account’s private key, which is another kind of crypto hacking. The blockchain’s data is unchangeable. Even in these hacks, the blockchain is usually unaffected.