What has intensified investor pain further is the unabated cyber-theft that has drained billions of dollars from crypto holders’ accounts. Since crypto transactions are usually irreversible, stolen coins are nearly impossible to reclaim.
Cybercriminals pilfered roughly $4.5 billion worth of digital currency in 2021, more than twice the 2020 total. In the first half of this year alone, nearly $2 billion worth of crypto has been lost to hacking, clocking a 60% jump in such instances.
Crypto theft remains a growing problem. As more investors turn to digital assets for wealth creation or to diversify their portfolios, learning how to protect crypto holdings has become a crucial part of investing. Here’s your essential guide to keeping your crypto safe.
What makes crypto vulnerable to hackers?
Cryptocurrencies live on the blockchain, a form of digital transaction ledger. Since crypto transactions are decentralized, there are no intermediaries to supervise them. Motivated hackers with sophisticated knowledge of blockchain technology can exploit that by finding weaknesses in the safety mechanisms of crypto exchanges and online crypto trading platforms, as well as investors’ often poor understanding and implementation of safety tactics.
“Crypto vulnerabilities could be caused due to lack of security awareness or failure to employ security standards such as multi-factor authentication,” says Joe McGill, an investigator at TRM Labs, a blockchain intelligence company that helps governments and financial institutions to fight fraud, money laundering and financial crime.
Malicious links and software can also make crypto vulnerable. If clicked or installed, they could compromise sensitive information, notes McGill, who is a former U.S. Secret Service and Postal Investigator.
Phishing is a leading cause of theft in the crypto industry, just as it is in the traditional finance world. “Scammers post fake websites posing as popular brands in an effort to trick users into connecting to malicious contracts or steal personal financial information,” say McGill.
More recently, account takeover, or ATO, attacks have grown increasingly popular. An ATO is an automated scam in which criminals gain access to online accounts via bot-driven hacking techniques, such as credential stuffing or credential cracking.
