CRYPTO

How education, security, and regulation can help in mitigating crypto scams

Crypto losses to bad actors have surged considerably in the previous two years. Still, cybersecurity experts feel there is little cause for fear because most new technology is abused in its early stages. According to CertiK's annual Web3 security report for 2022, malicious actors drained over US$3.7 billion in value through Web3 protocols last year, an 189% increase over the US$1.8 billion lost in 2021.

According to CertiK's report for the first quarter of 2023, hackers gained access to almost US$320 million in the first three months of the year.

Kang Li, CertiK's chief security officer, told Cointelegraph that innovative technology is frequently a target for exploitation, and the crypto sector is only the most recent victim of its success.

"As new technologies emerge, they frequently become targets for malicious activities simply because they present new vulnerabilities and exploitation opportunities," Li explained.

"This has been seen throughout history, from the early days of the internet to the rise of email and, more recently, with the advent of blockchain and cryptocurrency," he added.

Because the business is still relatively new and fast expanding, some participants, according to Li, are more focused on expansion and innovation than on security, leaving them exposed to assaults and likely contributing to the significant number of losses documented.

Statista, a data collection tool, estimates that the crypto business, which has witnessed enormous development since 2017, will continue to grow, with revenue estimated to reach US$64.87 billion and worldwide users likely to reach 994 million by 2027.

According to Li, the quick increase in users and income and other industry advancements may contribute to protocols being abused.

"Blockchain technology and the smart contracts that underpin many cryptocurrencies are highly complex; this complexity can create security vulnerabilities that skilled hackers can exploit," he added. "Cryptocurrencies also hold real value and can be exchanged for traditional currency in many places around the world; this makes them an attractive target for hackers who can transfer and potentially liquidate stolen cryptocurrencies quickly."

According to Li, as security in the crypto realm improves, and Web3 matures, we will see fewer successful hacks, exploits, and frauds in the long term.

However, he believes there will always be a constant war between bad actors and blockchain security professionals as they strive to achieve their objectives in a constantly developing sector.

"While hacks and exploits pose significant risks, they should not deter us from appreciating the enormous potential and innovative capabilities of blockchain and cryptocurrency technology," Li added.

"Rather than being a cause for retreat, they should serve as a clarion call for us to redouble our efforts to ensure that these transformative technologies can be used securely and responsibly."