What has further added to investors’ pain is the unabated cyber theft that has drained billions of dollars from crypto holders’ accounts. Since crypto transactions are usually irreversible, it is almost impossible to reclaim stolen coins.
Cybercriminals stole around $4.5 billion worth of digital currencies in 2021, more than double the total for 2020. In the first half of this year alone, nearly $2 billion worth of cryptos have been lost to hacking, a 60% increase in such cases.
Crypto theft remains a growing problem. As more investors turn to digital assets to create wealth or to diversify their portfolios, learning how to protect crypto holdings has become a crucial part of investing. Here’s your basic guide to keeping your crypto safe.
What makes crypto vulnerable to hackers?
Cryptocurrencies live in the blockchain, a kind of digital transaction book. Because crypto transactions are decentralized, there are no middlemen overseeing them. Motivated hackers with sophisticated knowledge of blockchain technology can exploit this by finding weaknesses in the security mechanisms of crypto exchanges and online crypto trading platforms, and the often poor understanding and implementation of security tactics by investors.
“Crypto vulnerabilities could be caused by a lack of security awareness or not adhering to security standards like multi-factor authentication,” says Joe McGill, an investigator at TRM Labs, a blockchain intelligence firm that helps governments and financial institutions combat fraud. money laundering and financial crime.
Malicious links and software can also make crypto vulnerable. If clicked or installed, they could compromise confidential information, notes McGill, who is a former US Secret Service and poster investigator.
Phishing is one of the main causes of theft in the crypto industry, just like in the traditional financial world. “Scammers publish fake websites posing as popular brands to trick users into affiliating with malicious contracts or steal personal financial information,” says McGill.
Recently, account takeover or ATO attacks have become increasingly popular. An ATO is an automated scam that allows criminals to gain access to online accounts via bot-driven hacking techniques such as credential stuffing or credential cracking.