5 Comman Hacking Methods In Crypto Market – Bitcoinik

Blockchain technology is one of the most secure technologies in the world. It is built on cryptography, decentralisation, and transparency. But here’s the reality: blockchain hacks happen all the time. And they can cause a lot of damage.

Many crypto investors have lost billions of assets or Money due to hacking attacks, exchange failures, and smart contract weakness. Even many big exchanges with tight security measures have faced security breaches. 

How Cryptocurrency Hacks Happen

Hackers are very smart in nature, they always look for weak spots. Weak points can be poorly written smart contracts, exchanges with weak security, and an unsuspecting investor clicking on a fake link are examples of weak points. 

Here are some of the common ways hackers strike:

Exploiting vulnerabilities in smart contracts:- If a smart contract is not written well this can lead to a security breach and also lead to financial loss. 

Targeting centralized exchanges:– Those exchanges that have a high amount of crypto assets can make a prime attack target for hackers. 

Phishing attacks:– any misleading link, email or fake website or fraudulent wallet can trick users into giving up their private keys.

Malware and keyloggers:– Some hackers install software on a user’s device to access passwords and access their Wallets without the user’s consent.

51% attacks:– If a hacker takes control over half of the mining power of blockchains, they can influence transactions.

Now, let’s break down the five most common blockchain hacks and how they work.

1. Exchange Hacks

Crypto exchanges work similarly to a digital bank. Crypto exchanges hold millions/ billions of users’ funds. This makes crypto exchanges a prime target of hackers. 

The recent Bybit hack is now the biggest hack in terms of dollar value. The hackers get access to the Bybit ETH hot wallet and withdraw more than $1.4 billion worth of ETH. Bybit stays strong and give users 1:1 of user funds.

Mt Gox was one of the most famous exchange hacks. In 2014, this Japan-based exchange was handling about 70% of all Bitcoin transactions. Then, disaster struck. Hackers stole 850,000 BTC, worth over $450 million at the time. 

In 2022, we saw the FTX exchange collapse due to its mismanagement. In a hacking attack, hackers looted 400 million dollars from its Wallet. 

There are some points to remember to stay safe:- 

• Don’t keep all your funds on a single exchange.

• Use the exchange that has strong security features like two-step authentication and cold storage.

• Always withdraw your assets into a secure wallet, preferably a hardware wallet.

2. Smart Contract Exploits

Smart contracts are self-executing agreements that run on the blockchain. If there is a bug in the code, hackers can take advantage of it. 

The DAO hack is one of the biggest smart contract hacks that happened in 2016. The DAO was an Ethereum-based decentralized fund. Unfortunately, its smart contract had an open security vulnerability that allowed hackers to steal 60 million dollars worth of ETH. After this hacking attack, Ethereum split into two chains:- Ethereum (ETH) and Ethereum Classic (ETC).

The Ronin Network hack was another example of a smart contract hack that happened in 2022. where attackers stole 625 million dollars from Axie Infinity’s blockchain bridge. 

Some points that can help to stay safe:- 

• Avoid such smart contracts that haven’t been verified by security experts.

• Deeply research the projects you invest in.

• Be careful with DeFi platforms offering extremely high yields.

3. Phishing Attacks

Users often receive fake emails. The received emails look similar. It’s from Binance. It always asks you to log in, so be careful because it can be a phishing attack. 

Phishing attacks trick users into giving up their private keys or login information. Phishing attacks usually happen through: 

• Fake emails look similar to those from exchanges or wallets.
• Fake websites that look identical to real websites. Users have to be extra careful while clicking on such website Links.
• Harmful browser extensions or mobile apps.

In 2021, a fake Trezor wallet website tricked users into entering their seed phrases. As a result, Millions of funds were lost. 

How to stay safe:

• Never click on scam emails or links.
• Always check the URL address before clicking on this.
• Use hardware wallets and never share your seed phrase.

4. 51% Attacks

A 51% attack happens when someone takes control of more than 50% of a blockchain’s mining power. After a 51% attack, hackers can double-spend coins and reverse transactions, which completely breaks the system’s security. 

Smaller blockchains are not as safe as big blockchain networks. For example, Bitcoin’s mining power is safe from a 51% attack because it has massive mining power. 

Ethereum Classic is one of the biggest 51% attacks that happened in 2019. In this hacking attack, hackers have taken control of the majority of the network’s mining power and double-spent 1.1 million dollars worth of ETC. 

Some points are considered to stay safe:- 

• Always be part of a major, well-established blockchain that has strong security features.

• Be careful about investing in smaller proof-of-work cryptocurrencies.

5. Rug Pulls and Exit Scams

Sometimes the biggest threat is not hackers but the project’s founders themselves are the biggest threat.

When a founder launches a project, hype it up attracts more investors, and then suddenly disappears, and all the money of investors is lost. 

Squid Game Token (SQUID) is the perfect example of a rug pull. This scam token was inspired by the hit show of Netflix hit show. Its value touched a very high in a short time, only for the developers to vanish with 3.3 million dollars overnight. Investors were left with useless tokens.

There are some points to keep in mind to stay safe:- 

• Avoid such projects that promise quick riches.

• Check the profiles of developers who are publicly known and reputable.

• Be doubtful of tokens with low liquidity and no real use case.

How to Prevent Crypto Exchange Hacks?

Rich exchanges are always prime targets for hackers, but you don’t have to suffer from this attack. Here’s what you can do to keep your funds safe:

• Use a Hardware Wallet:- Always use an offline hardware wallet for storage of your digital assets because hardware wallets are the safest way to store your funds.

• Enable Two-Factor Authentication (2FA):- Always enable two-factor authentication on your Exchange account. Use an authentication app instead of SMS.

• Withdraw Large Amounts:- If you have a large amount of crypto assets in your exchange account, don’t leave all the amount on the exchange. Withdraw your funds to a personally secured Wallet. 

• Be Wary of Phishing Scams:- Never enter your login information on any Website unless you trust 100% that website.

• Use Reputable Exchanges:- Always prefer well-known exchanges with strong security features.

Final Thoughts

The crypto world is full of excitement, but it is also very risky. Hackers are always looking for different ways to steal your funds. By understanding how hacks happen and taking the necessary precautions, you can keep your assets safe from such attacks. Following these steps, you can get rid of becoming the next victim.  So, stay alert, do your research, and most importantly—never share your private keys with anyone.