Cyberattacks and bitcoins: What you need to know - Kalkine Media

April 21, 2023 12:10 PM AEST | By Arisha Tariq (Guest)
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Do you like digital currencies? Despite Bitcoin's widespread praise as the future currency, hackers still try to steal it. Hackers are increasingly targeting Bitcoin exchanges and wallet providers.

Let's dive in right now! What are these cyber assaults, and how may they affect your Bitcoin holdings? In this post, we'll go into the murky area of Bitcoin cybercrime, discussing the many kinds of assaults, the precautions you may take, and the potential outcomes.

Different forms of Bitcoin cybercrime

Some common forms of online assault against Bitcoin are described here.

Hacking:

The majority of assaults against Bitcoin include some kind of hacking. To commit this crime, one must hack into a Bitcoin wallet or exchange and remove money.

Phishing:

Another kind of cyber assault against Bitcoin is phishing. It entails sending phishing emails or creating phony websites to deceive people into giving up their login credentials or other private information. In 2017, victims of a phishing scam were those who used the Electrum Bitcoin wallet. Users' Bitcoin private keys were stolen using a phony version of the Electrum wallet.

Ransomware:

The files of an infected user are encrypted by ransomware, which then demands money in return for the decryption key. Bitcoin holders have been victims of ransomware that requires payment in Bitcoin. In 2017, for instance, the WannaCry ransomware assault hit thousands of systems throughout the globe, including the NHS in the United Kingdom. To decrypt the victims' data, the attackers requested Bitcoin payment.

Social engineering:

Social engineering attempts to persuade an unsuspecting target to divulge private information or do some other action to achieve an attacker's goals. A Reddit user with significant Bitcoin in their wallet was the focus of a hacking attempt in 2018. The attacker employed social engineering to trick the victim into installing malware, which gave the attacker access to the user's Bitcoin wallet.

High-profile attacks on Bitcoin exchanges and wallet providers

  • The Tokyo-based Bitcoin exchange Mt. Gox was hacked in 2014, losing over 850,000 Bitcoins (equivalent to about $450 million). A security hole in Mt. Gox's software enabled the hackers to withdraw massive Bitcoin without using credentials.
  • Bitfinex was hacked in 2016, losing over 120,000 Bitcoins (about $72 million). A flaw in Bitfinex's multi-signature wallets might allow hackers to grab the assets.
  • Approximately 4,700 Bitcoins (almost $64 million at the time) were stolen from the Slovenian mining marketplace NiceHash in 2017. NiceHash's payment mechanism was breached, allowing the hackers to make off with the money.
  • The Japanese cryptocurrency exchange Coincheck was hacked in 2018, losing over 500 million NEM tokens (valued at about $530 million). The intruders were able to breach Coincheck's defenses and steal funds from the exchange's hot wallet because of a security flaw.

Measures to protect your investment

Take heed to these precautions to protect your Bitcoin holdings:

Invest in a reliable wallet

The first line of defense against cybercrime is a safe Bitcoin wallet. Choosing a wallet that provides privacy and security features like two-factor authentication and encryption is essential. Two-factor authentication increases security by using two different methods of identification, such as a password and a text message verification code. Using encryption, your wallet's private keys will be safe against theft. Choosing a wallet that gives you complete command over your private keys is also crucial. You don't have to trust anybody else with your Bitcoins; you always have complete control over them.

To keep Bitcoins safe, many people use hardware wallets. Your private keys are safe from hackers since they are stored in offline hardware. You'll need a PIN to decrypt the private keys stored on the gadget.

Stay out for phishing scams

Cybercriminals often resort to phishing schemes to get Bitcoin. Emails or messages purporting to come from a Bitcoin exchange or wallet provider are a common tactic used in these frauds, as is the request for additional personal information. Your Bitcoins will be at risk if you provide this information to the attackers.

Be aware of unsolicited emails or communications that request personal information to protect yourself against phishing schemes. If you're concerned about an attacker using the same password to access several reports, utilizing a password manager to create and store unique passwords for each account is a good idea.

Use a reputable exchange

Select a trustworthy Bitcoin exchange with a proven reputation for keeping user data safe. Take your money from the exchange and save it in a controlled wallet. Seek establishments that put the bulk of their cash in cold storage (offline wallets) and provide two-factor verification. Cold storage wallets are far more secure than online wallets since they are not connected to the internet.

Keep your software up-to-date

You should always use the most recent version of the software when dealing with Bitcoin, including your Bitcoin wallet. Security patches that correct previously discovered flaws are a common component of updates. If you don't update your software, you can leave yourself vulnerable to exploits patched in the most recent release.

Think about coverage

Consider obtaining insurance if your Bitcoins risk being stolen or lost due to a cyberattack. Some insurers will cover Bitcoin investments. You may rest easy knowing that your investment is safeguarded against loss in the case of a cyberattack with the help of one of these insurance policies.

Taking these precautions can help safeguard your Bitcoin holdings from hacking attempts. Be cautious, constantly update your software, and adhere to reliable providers prioritizing safety.

The future of Bitcoin and cybercrime

There's a lot of talk about the future of Bitcoin and criminality. The popularity of Bitcoin has facilitated the work of hackers. Because of Bitcoin's decentralized structure, it takes a lot of work for authorities to trace and collect illicit cash. The secrecy of Bitcoin transactions makes it easier for thieves to operate covertly.

Bitcoin may influence cybercrime. However, this may be lessened by the increased focus on and adoption of cybersecurity solutions. There has been a widespread effort by governments and law enforcement agencies to regulate cryptocurrencies and curb their usage in criminal transactions. Some nations have instituted stringent controls on cryptocurrency exchanges, making companies confirm customer identities and report any questionable activity.

More people and companies will likely start making legal use of Bitcoin and other cryptocurrencies as their usage becomes more widespread. Since the danger of getting detected may now be greater than the possible profits, widespread acceptance of Bitcoin may minimize its usage in criminal operations.

Conclusion

Bitcoin is a decentralized and secure digital currency that has shaken the financial world. The danger of cyber assaults, in particular, increases with the introduction of new technologies. You are safeguarding your Bitcoin investment by utilizing a secure wallet, being wary of phishing scams, trading using a trustworthy exchange like Ethereum Code, using up-to-date software, and considering insurance.

There is still a lot of mystery surrounding Bitcoin and cybercrime, but that doesn't mean you shouldn't prepare for the worst. It is crucial to be up-to-date and flexible as the Bitcoin world develops and new threats and opportunities arise. You can defend yourself and your assets from cyber threats by being alert and adopting preventative actions.

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