From billionaire Elon Musk to Indian actor Amitabh Bachchan joining the crypto space, the hype around cryptocurrency is increasing and the prices of these digital coins are also on the rise. But while crypto coins give a high rate of return, they are just as susceptible to cyber attacks.
Cybercriminals are now taking advantage of the ongoing Bitcoin craze to deceive potential victims and steal their digital money, research from Barracuda, a cloud-based security solutions provider, reveals. At least 7,000 people lost more than $ 80 million in crypto scams between October 2020 and March 2021 – a 1,000% increase from a year ago, according to the U.S. Federal Trade Commission.
Meanwhile, blockchain hackers are not only targeting crypto holders, but crypto exchanges as well, according to Atlas VPN. Their study showed that $ 3.78 billion in digital assets were stolen in 122 attacks in 2020. More recently, in one of the biggest cryptocurrency heists of all time, a group hacker stole $ 613 million worth of digital coins from the Poly Network token exchange in August. While the company claims the hackers behind the heist have now returned almost half of the tokens they stole, but in the cryptocurrency world there are no guarantees.
How do cybercriminals use crypto as a scam tool?
Fueled by the buzz around Bitcoin, the value of cryptocurrencies increased by almost 400% between October 2020 and April 2021. The growing value of cryptocurrencies has also seen an increase in email compromise attacks of 192 % between October 2020 and May 2021, Barracuda reported. .
It should be noted that the digital format of cryptocurrencies makes them decentralized in nature and without any regulation, and hence the currency has become a safer choice for cybercriminals. Hackers use Bitcoin to get paid in extortion attacks where they claim to have compromising video or information that will be made public if the victim does not pay.
Cyber hackers are now targeting and personalizing fake emails to trick victims into buying Bitcoin, donating it to bogus charities, or even paying a fake vendor bill using cryptocurrency.
What are crypto wallets? How Secure Are Crypto Wallets?
Digital currencies such as Bitcoin, Ethereum or Dogecoin are stored in what is called a “wallet”, which you can access using your “private key” – the crypto equivalent of a super secure password – without which the owner of the crypto cannot access the currency.
A crypto wallet stores the private keys that allow the user to access their cryptocurrencies, which allows them to send and receive cryptocurrencies like Bitcoin and Ethereum. It should be noted that your coins are stored on the blockchain and the private key is required to authorize transfers of those coins to another person’s wallet.
There are different types of crypto wallets available that meet different requirements for security, reliability, accessibility, etc. Here we explain all the types of wallets available and their security:
A mobile crypto wallet is an essential tool for those who actively trade in cryptocurrency. It works like an app on your smartphone, storing private keys and allowing you to pay for things, exchange and store cryptos with the phone.
Electronic wallets or web wallets store your private keys on a server, which are controlled by a third party. The organizations that run the website can access your private keys, thus gaining full control over your funds. Typically, these are less secure.
Office wallets store the private keys on your hard drive or SSD on your computer. These are more secure than web and mobile wallets because they don’t depend on third parties for their data and are more difficult to steal.
A paper wallet or an offline wallet is a printed piece of paper that contains your private keys and QR codes which are used to facilitate cryptocurrency transactions. Because they are deleted from the Internet, they are considered to be one of the most secure.
A hardware wallet stores the private keys in a secure physical device, this is one of the best ways to protect your cryptocurrency. Plus, they’re immune to computer viruses, making it virtually impossible for hackers to steal your coins.
What happens to stolen cryptocurrencies?
Lost crypto coins cannot be recovered and permanently leave the currency’s circulating supply. According to Cane Island Digital Research, 4% of available Bitcoin is lost each year. But, how are cryptocurrencies stolen or lost?
When sending cryptocurrency from one wallet to another, the user is prompted to enter the recipient’s address, which is a combination of numbers and alphabets. However, if you send the digital asset to the wrong address, there is no way to reverse these transactions.
Another major reason cryptocurrencies get lost is if you enter the wrong password into the wallet. This year, for example, a San Francisco programmer made headlines when he found himself barred from a crypto reader with $ 220 million worth of Bitcoin stored on it. He only has two more attempts to enter the correct password before his coins are permanently lost.
If a user’s private key is stolen, all cryptocurrency from the compromised address can be transferred. In this case, the blockchain network has no provision to identify the thief or block further transactions of these stolen crypto assets. Meanwhile, cryptocurrency is not legal tender in India and most parts of the world, as coins in circulation are mostly created privately.
How to secure your crypto investments?
The security of wallets depends on how the user manages them. The biggest danger in the security of cryptocurrencies is that the individual user might lose the private key. Online wallets are the easiest wallets to set up and use, but are also the most susceptible to cyber attacks. One way to secure your cryptocurrency is to use an offline wallet instead of the online one.
Offline Wallets: A paper or hardware wallet can be used through your desktop, mobile, or specially designed hardware. However, when using an offline wallet, be sure to enable multiple levels of authentication before you can access your crypto holdings.
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