5 Cyberattacks to be Wary of When Using Your Crypto Wallet

The cryptocurrency ecosystem is considered to be one of the safest due to technologies like cryptography, blockchain, and smart contracts. Transactions are secured through a system in which the network relies on nodes to verify the authenticity of the agreement. At the same time, blockchains present features of transparency and immutability based on consensus mechanisms, like proof of work or proof of stake.

Unfortunately, developers know that creating an entirely safe and impenetrable network is impossible. Human errors and other vulnerabilities always arise, exposing systems to cyberattacks. For example, smart contracts are prone to incorrect calculations, reentrancy, and problems with the ERC20 token.

However, one of the most troubling cyberattacks occurs when it affects people’s wallets. Many times, users lose a considerable part of their assets as hackers target a certain type of investor whose security is less prominent.

So, if you want to protect your cryptocurrency, here are some of the most known attacks focused on crypto wallets.

Private key attacks

There are numerous ways to protect crypto wallets, but some of the most important ones rely on private keys. The private key is a set of letters and numbers that users must not share with anyone, as it gives them access to their wallets. Most people store their private keys in their wallets, as it’s the most convenient, but having them offline is much safer.

That’s because offline storage is best when dealing with cryptocurrency. Usually, the wallet will have to connect to another party for the transaction to be completed, whether it’s a Bitcoin or Solana wallet, meaning there is a chance of a malware attack accessing your private key.

Passphrase attack

Your passphrase can also be stolen right when you enter its value within the app. It might be unthinkable for someone to be right next to you and steal the passcode, but it’s not impossible, so make sure never to disclose it. Other ways to do it include keylogging malware, in which your keystrokes are linked with the hackers’.

The hacker can also create an overlay attack in which they employ a fake screen to trick you into entering the passphrase. Screensharing, screenshots, and screen recording apps should be avoided.

Malicious attacks

Malicious attacks happen when users leverage wallet apps through mobile clients, meaning they rely on their security and technology. However, if the app is rooted or experiences an issue, cybercriminals can get the chance to gain access to your wallet through a simple software system.

Usually, mobile crypto wallets are relatively safe, but considering they’re connected to the internet and have several points of failure, hackers can take advantage of vulnerabilities and perform malware attacks or physical theft. Ideally, you should use these wallets for short-term storage, whether you buy NFT-based assets or cryptocurrencies.

Phishing attacks

You may wonder how do phishing attacks work in the crypto industry, given the high levels of cryptography. However, this attack is not that complex to create, especially when hackers cater to them carefully. There are four common phishing attacks in crypto:

• The spear phishing attack targets specific users or organizations, in which the hacker knows just enough about the victim to create a personalized email;

• The whaling attack targets wealthy individuals or high-profile companies;

• The clone attack happens when the hacker creates a copy of a legitimate email through which the user has engaged before;

Unfortunately, there are even more specific attacks that focus on different aspects of the user and their wallets or portfolios.

MitM attacks

Man-in-the-middle attacks puts the hacker between the user and the application leveraged for transacting with crypto. In this case, considering that users leverage both centralized and decentralized systems, MitM attacks are more than prone to happen since not all networks can connect through similar security systems.

MitM attacks happen after the hacker intercepts a user’s traffic through its network. Usually, they create a malicious WIFI hotspot that matches the victim’s location. After that, the attacker continues with an SSL protocol that decrypts the network so that the user cannot be alerted by the application used.

How can you secure your crypto wallets?

Crypto cyberattacks have happened almost since the day Bitcoin became popular among investors, so there’s no surprise in how they occur. We’ve seen how sophisticated attacks can become, from the Mt. Gox attack that led to its liquidation to the FTX event that resulted in $477 million stolen from people’s wallets.

Therefore, regardless of what you invest or when, you must be prepared and secure your wallet to minimize the chances of being the next hacking victim. Here are some things you should be careful of when making a crypto transaction with your digital wallet:

• Emails that look suspicious, especially when grammar is poor and the message seems urgent;

• Links or attachments that might download malware into your device;

• Less-known exchanges or wallet companies whose security is not updated;

At the same time, you must keep your operating system up to date because this ensures your device can better withstand an attack. On the other hand, an outdated system is more sensible to attacks. Don’t forget to use strong passwords for your accounts and change them from time to time. At the same time, avoid reusing the same password on different accounts.

It’s also important to stay up-to-date with the latest hacking news so you know what trendy attacks look like. Hackers come up with more sophisticated ways to steal money now than a few years ago, so you will be surprised to find out what tactics they use in the modern world.

What do you think about crypto wallet safety?

Crypto wallets are essential because they allow users to safely store their cryptocurrencies without relying on centralized wallets or institutions. However, due to vulnerabilities in the systems and users’ lack of awareness about possible attacks, they can be susceptible to various hacking attacks. Therefore, investors must secure their wallets; otherwise, they might experience phishing or other complex attacks.