Tech

Can Cryptocurrency be Hacked?

The world of digital assets is promising to change the way we exchange information, communicate and transfer valuable assets. This world does not only include cryptocurrency because this just defines the financial form of a digital asset. Digital assets can include anything that is already traditionally stored in physical form, as well as any transactions therein. Things like money, personally identifiable information including everything from names, addresses, social security numbers, driver’s licenses, medical information, access credentials, financial information, you name it, it can be digitized. Furthermore, smart contracts can be digitized, as well as virtual assets in the form of Non-fungible Tokens (you may have heard of these NFTs). All of the former is a form of a digital asset. The digital world is also a very scary place filled with cybercriminals, and surveillance and of course, it is an environment open to human error. Digital assets are not uncrackable, which is why common cryptocurrency scams are all over the place.

What are Crypto and Blockchain?

The common factor that holds together and stores, as well as encrypts, all forms of modern digital assets is known as the revolutionary “blockchain.” The blockchain was mysteriously introduced by an anonymous figure known as Satoshi Nakamoto in 2010 when a technical whitepaper about the technology was released for the first time. At the same time, cryptocurrency showed its face on IT forums. As a result, cryptocurrency has been around for just over a decade now, only really picking up speed in the past few years when millions of people started investing in the paradigm, and conversations surrounding the fact that this is the future of money started taking hold. Today, cryptocurrency has, what was deemed unthinkable before, real utility in the real world. Even banks that were slow to pick up on this new technology are now in the game, competing to stay alive in the wake of decentralized digital assets like a cryptocurrency that, some say, remove the need for having a bank account at all. Certain cities around the world are already implementing the blockchain into all of their transactions.

But, and this is a big but, cryptocurrency has its caveats and is not always the utopia it seems to be. This is because, in essence, anything that is digital can be swiftly compromised by the criminal sector, namely cybercriminals in this case. It is not that the inherent technology of cryptocurrency currencies such as Bitcoin and Ethereum, to name the big ones, can be hacked. The problem is in other vulnerabilities affecting decentralized financial projects and systems on the blockchain, as well as vulnerable crypto exchanges that can sometimes store billions of dollars of people’s money worth in crypto. The biggest coin exchanges are Coinbase and Finance at the moment, and they hold dozens if not hundreds of different types of coins such as alt-coins. Both of these mega-exchanges have had their fair share of serious incidents, unfortunately, but are still up and continue to serve the public.

Can Crypto be Hacked?

The answer is a resounding yes. Anything digital and online can be compromised by a willing and skillful enough attacker, or worse a dedicated team of attackers. Recently, there have been dozens of attacks on DeFi and coin exchanges that have resulted in billions of dollars being stolen by online users. Most of the time, this money can be returned by the companies that offer the services, but not always. Even if the stolen money is reimbursed to customers, this usually takes a long time to process. Secondly, the criminals responsible for these attacks are sometimes located, but sometimes they are not. Such is the nature of the anonymous blockchain, and cybercriminals know to exploit these facts all too well. Cybercriminals can stay hidden and anonymous online much better than they ever could in the real world. We have seen this in cases like the couple that made away with almost $5 billion in cryptocurrency (but was later caught), the Ronin Axie hacks, the Poly network fiasco, as well as several other DeFi vulnerabilities that resulted in funds being compromised. Every month there are more incidents involving the blockchain.

Another fundamental issue is human error. Aside from direct attacks on crypto exchanges and DeFi projects orchestrated by external actors, to trade and store crypto a wallet and a computer or mobile device is required. So that’s either a desktop computer, a laptop, smartphone, or tablet. A wallet is a sort of USB key that interacts with crypto applications and can store money. This USB wallet is known as a cold wallet, while a software wallet is known as a hot wallet. Both carry their risks. For one, a USB wallet can be stolen, while a hot wallet residing on someone’s device can be hacked. Furthermore, forgetting or losing one’s private wallet key means losing access to the crypto stored there. It is easy to see how human error can cause horror stories, too. 

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We can’t control what happens to the services we use. What we can control is the safety and privacy of our data and our devices. What can you do to keep your cryptocurrency safe? There are three main pillars to consider; keeping your devices cyber secure, not investing in shady transactions, and staying away from dangerous email social engineering scams. This means investing in a premium VPN to protect your internet connection, using antimalware software to scan for threats, storing your passwords (that are hopefully random, long, and unique) offline, as well as understanding that opening links or attachments in emails from unknown senders can lead to scams where you will ultimately be compromised in some shape or form.

Ultimately, cryptocurrency and other digital assets and blockchain transactions promise a great future for humanity. Soon, traditional banking systems will not have the trust they once had any longer, because all you need to trade cryptocurrency is a wallet and some trading knowledge. After all, decentralized finance is encrypted and lightning-fast, almost immediate, incomparable to traditional bank transactions. Now, armed with this knowledge, you can start making amazing gains thanks to decentralized systems and the cryptocurrency revolution safely and cautiously!

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