Cryptocurrencies like Bitcoin and Ethereum have grown astronomically in recent years. But the rise of these crypto coins has been accompanied by equally meteoric rises in scams, hacks, and all manner of other threats.
Therefore, it’s imperative that before you get concerned with how to buy cryptocurrency or how to convert cryptocurrency (fiat), you familiarize yourself with common crypto vulnerabilities. In case you are new to the crypto world, here are some of the common vulnerabilities you should look out for.
51% Attack
In a 51% attack, the attacker controls more than 50% of the network’s mining hashrate. This gives them a majority vote on what transactions get included in blocks and when. A hacker can use this power to double-spend cryptocurrency or shut down a blockchain entirely by refusing to confirm other people’s transactions.
The main reason why 51% of attacks are so powerful is that they allow an attacker to reverse transactions that were confirmed by honest miners without their knowledge (a double spend). This can be used to steal money from exchanges and merchants or sell stolen goods for profit. It also allows attackers who control large amounts of hashing power (and therefore control many blocks) to censor transactions at will by excluding valid ones from their blocks.
Phishing
Phishing is a form of social engineering that seeks to steal your login credentials and private keys. It is the process of pretending to be someone legitimate. In this case, cryptocurrency exchange or other service providers to gain access to your login information. Phishers often create fake websites that appear legitimate but are meant only for this purpose, to collect data from their victims.
To avoid being phished:
- Use official sources for information about cryptocurrencies
- Always check URLs before clicking links in emails
- Don’t click on links embedded in emails or phone texts
In some cases, scammers will try using SMS messages with links leading directly to a site where you can enter personal information (like passwords). If you’re ever unsure whether something is genuine (or if it could simply be an honest mistake), do not hesitate. Reach out directly via email or phone call instead.
Ransomware
Ransomware is malware that, when it infects a device, aims to encrypt files and then demand payment for their decryption. In most cases, ransomware will try to spread from one device to another through phishing emails or malicious websites that try to install malware on your system.
Ransomware attacks can be prevented by not clicking on links or attachments in suspicious emails and updating security software regularly. If you do get infected with ransomware and have backups of your data, there are tools available that can help you decrypt it without paying any money.
Blockchain Vulnerabilities
Blockchain is a distributed ledger, meaning it’s stored on multiple computers rather than on one central server. It’s also immutable and transparent, which means that once something is stored in the blockchain, it cannot be changed ever. Blockchain was designed to be decentralized, no single entity can access or control the entire blockchain network.
While blockchain is secure but only as secure as its weakest link. That’s because no security measures can protect against human error or malice. Someone with access to your computer could still hack into your accounts if they wanted to change something in them. There have been several incidents of hackers breaking into large corporate blockchains and stealing hundreds of millions of dollars worth of cryptocurrencies over the past few years.
Blockchain isn’t a silver bullet that makes everything better by itself. It needs other systems like authentication tools (e.g., 2FA) and strong encryption technologies to work properly without being hacked by criminals out there trying their best to steal cryptocurrencies from others.
Hacked Exchange/Wallet
Hacked exchanges and wallets are the most common way to lose cryptocurrency. This is one of the primary ways that hackers have been able to steal money from crypto users.
It should be noted that exchanges are vulnerable to hacking because they are often a target for hackers. They hold a lot of money (your money) and therefore make an enticing target for malicious actors who want to get their hands on that sweet, sweet cash for themselves.
Bottomline
In conclusion, a cryptocurrency is a great tool for individuals and businesses alike, but it does have its vulnerabilities. However, by knowing about these risks and taking the proper measures to protect yourself, you can ensure that your digital funds are safe. Think of it like going on vacation, it’s always wise to do some research about the area beforehand so that you know what to expect and how you’ll be able to keep yourself safe. Just as you wouldn’t travel without locking your house’s doors first, there are some basic steps you can take before embarking on any online financial journey. First and foremost would be learning more about cryptocurrency security.
