Cryptocurrencies are so popular because of their unique mode of transfer. Typically, if you’re making a transaction in your bank account, the bank acts as a middleman. With blockchain technology, you’re afforded the right to make a transaction directly to the receiving crypto address. This factor has led several individuals in economically unstable countries to use digital currency.
When you use cryptocurrency, you essentially become your bank. It is because of this reason hackers have doubled efforts to steal cryptocurrency funds from holders. Cybercriminals also attack cryptocurrency holders because the blockchain industry is mostly unregulated. These hackers employ varying methods to steal crypto funds.
Various Crypto-Theft Procedures used by Cybercriminals
Phishing attacks typically target users of a particular trading platform. It involves the cloning of a legitimate website to steal a user’s details.
First, the hacker gets the email addresses of individuals using a specific crypto trading platform. Then, an email requiring immediate action is sent to the potential victim. A link resembling that of the original domain is then attached to the email.
The unsuspecting individual opens the email, clicks on the link, and attempts to login on the fake page. The login details are then sent to the hacker, who, in turn, uses the details to log in to the victim’s account.
- Crypto Exchange Hacks
Since crypto exchanges store a lot of monetary value, they’re frequently attacked by hackers. Some of the biggest cryptocurrency exchanges have been hacked, with large amounts stolen from them. In 2018, Tokyo-based exchange, Coincheck, was hacked of $500 million.
Mt. Gox was hacked of 850,000 bitcoin in 2014. Bithumb, the South Korean exchange, was breached in March 2019. At least 20 cryptocurrency exchanges have been hacked since 2011 when Bitcoin started to gain relevance.
Malicious software or malware is used by hackers to perform various functions on a victim’s computer. Perhaps the most popular form of malware is crypto-stealing malware. It applies memory changes to change a wallet address to that of the hacker. Immediately you place in any address to send cryptocurrency to, it would be modified to a different one.
Another kind of malware is the cryptocurrency-miner malware. Since cryptocurrency can be acquired by mining, the hacker simply masks the miner that’ll be installed on your system.
These hackers populate the internet with free trading bots and free tools on forums. Unsuspecting victims who install the malware on their computers would experience reduced computer speed as a result of the miner working in the background.
Tips to Protect your Digital Currency Funds
- Utilize Two-Factor Authentication
Two-factor authentication or 2FA is a security check used to confirm the identity of a user further. An extra passcode would be required for the individual before allowing access to the account. This way, hackers get discouraged about stealing your user details.
For instance, if your username and password get stolen, a code would be sent to your email or phone number, requiring the hacker to input the details. Hackers find it hard to get your SMS or email messages and so, give up the process of logging into your account.
Most of the top crypto exchanges offer a multi-factor authentication option. Before you sign up on any exchange, verify if 2FA is utilized. If it isn’t, try another exchange.
- Use a VPN
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Virtual Private Networks are used to ensure anonymity and privacy when you use the internet. When you browse the internet, hackers are always attempting to spy on your information. A VPN makes sure only you and the entity you’re communicating with views the information transmitted.
If you use public Wi-Fi, there might be a hacker connected to it. Cybercriminals could also track your internet activity using a packet sniffer. In case this happens, buying a VPN would encrypt your internet traffic, hiding every bit of information from the hacker.
VPNs also ensure you remain anonymous while surfing the internet. You may not know this, but your Internet Service Provider snoops on your internet activity. Cryptocurrency services were meant to be private, and using a VPN protects that privacy by hiding your IP address.
- Store your Private Key Safely
Your private key provides access to your cryptocurrency funds. If a hacker gets ahold of it, your whole portfolio could get lost. The criminal could also threaten to expose your identity too.
If a cyber-attacker gains access to your account through your private key, it would not even resemble a scam. Reversing cryptocurrency transactions is impossible, and it means your crypto could be lost forever.
- Use Hardware Wallets
Some traders buy cryptocurrency for long-term holding. While using 2FA on crypto exchanges is recommended for active crypto traders, hardware wallets are advocated for investors. Software wallets, which are utilized on exchanges are more comfortable to hack because they’re mostly connected to the internet
A hardware wallet is considered the safest form of wallets. These wallets are USBs that can be connected to the internet when you intend to make a transaction.
However, you must take care not to lose or damage the wallet.
- Avoid Clicking Suspicious Emails
Steer clear of emails containing suspicious content. Before you take any email seriously, check the sender’s address. This way, you avoid getting phished.
Phishing emails typically contain incorrect spellings and grammar. Also, hover above any link you intend clicking. If the link address is different from that of the original website, do not click it.
Also, avoid downloading email attachments from unknown sources. These files could contain malware that would infect your system.
Because of cryptocurrency’s anonymous nature, cybercriminals have become increasingly encouraged to hack user wallets. The blockchain industry remains mostly unregulated and could result in the loss of most of your funds. Transactions made on the blockchain are also irreversible, making it more difficult to recover lost value.
Since you become your bank when you use cryptocurrency, you’ll need to take specific steps. Use a Virtual Private Network, lookout for phishing emails, use hardware wallets, activate 2FA, and keep your private keys in a secure place.