Why are Cryptocurrency Exchanges Hacked So Often?

Read the factors leading to mass cryptocurrency hacks.

Cryptocurrency

Cryptocurrency

Things that were not possible several years ago have now become the reality, and this is because of the evolution of modern technologies. Everything we buy whether food or dress or any kind of service, we often prefer online payments. Cash payments are becoming a relic of the past. Along with wireless payments like Google or Apple pay, cryptocurrency is broadly used, especially Bitcoin.

The main advantage of cryptocurrency is that it does not rely on banks for verifying transactions rather it relies on blockchain technology. Crypto means using encryption to secure the transactional data and ensure the validity of the transaction. This is the reason why it is difficult to hack because they are encrypted and there is no place for storing data. 

But we can’t say that cryptocurrency is completely hack proof because the money is stored in digital wallets that are a much easier target than blockchain technology. So if you think about investing in cryptocurrencies you must know about personal data protection.

 

Here we go with the factors that lead to mass cryptocurrency hacks.

Phishing 

The most effective way to steal cryptocurrency is by making people give away their access to the hackers themselves. In this method what hackers do is that they use a forgery of legitimate websites which look almost the same as the authentic ones. People who just want to exchange cryptocurrency, fall under this trap. In some cases, to increase the effect, potential hack emails which look like authentic confirmation mails are delivered to the targets. This mail contains the links to the forgery website where the potential targets need to enter their credentials. 

 

Compromising SMS verification 

People who are involved in operations with cryptocurrencies are usually attacked through this process. In this process, the main aim is to block the SMS verification message which contains the two-factor authentication on mobile phones. These can be done through different techniques such as cloning the SIM-Card, wiretapping, or voice phishing to ensure malicious transactions “recover” access to the crypto wallet.

 

Malware  

When it comes to cryptocurrency hacks, malware attacks are still the primary hacking techniques. In this process, the device is infected with keyloggers to steal passwords and PINs. When the user enters the password they are either redirected to malicious websites that sometimes are not even observable in a browser and in this way the sensitive details are stolen. 

 

Mobile applications 

Not all crypto trading mobile platforms are secure because of the poor architecture and security backdoors, thus are vulnerable to most cyberattacks like man-in-the-middle, or data breaches as API keys, and client’s sensitive credentials are stored in the unencrypted databases. There may be different aims for hacking mobile applications, starting from brute-force attacks to predicting the PINs or performing unauthorized actions on your behalf exploiting the market positions by building the demand or dropping the positions for some cryptocurrencies.  Stealing secret keys  

For any financial transactions with crypto, users need a pair of keys, public and private. The private one is only for the user which is used as a digital signature and the public key is to confirm the private key. The private key is saved in the crypto wallet, and if a user loses the private key, he can no longer use his assets. And if someone gets this private key, they can easily transfer all the funds into their wallets. 

Another factor that is concerning authorities is the increased use of privacy coins. These are cryptocurrencies like Monero that provide more oddity than mainstream coins like Bitcoin. In some blackmail cases, hackers are now asking victims to pay using these coins in exchange for a discount.