Cryptocurrencies and Bitcoin — everyone wants a piece of these internet gems. Whether you’re rich or poor, trading cryptocurrencies have some sort of charm, with the promise of getting rich quick. At the same time, there are many who would want to take the shortcut and steal.
There are weaknesses in cryptocurrency exchanges and transactions. Here are some of the ways you can prevent this from happening.
Cryptocurrencies are decentralized coins. What this means is that these coins are not governed by a single body.
Currently, the systems are run by cryptocurrency ledgers, which is a peer-to-peer trading system where all data is transparent and for all to see. This allows users to pick out any anomalies, therefore accurately recording and tracking all transactions. The public ledgers, however, do not allow anyone to change entries. Everything is done by an automatic verification process.
How is a Blockchain Secured?
To secure a blockchain, encryption is used to encode transaction information, which is passed on from one block to another. With all information chained together, this forms a very strong bond between each block, making it more secure. An existing blockchain thus is unable to get ‘hacked’, as people will be unable to crack the code and make changes.
How Can a Blockchain Be Attacked?
A blockchain can definitely get attacked by either a single or a group of attackers. By figuring out a way to take over the majority of a blockchain’s computational power, they will be able to make an attack on the blockchain, this is called a 51% attack. This attack means that they can change the transactions that had not been confirmed by the blockchain. Transactions are only typically successful only when it has undergone six confirmations.
How this works is that when a transaction is made, its data will be confirmed in each block, and passed on to the next. This must happen at least four or more times for the transaction to be fully confirmed. Those that fail to undergo this process can be targeted in a 51% attack. In this case, hackers who take control of this transaction can use the coins and transfer them to addresses that cannot be tracked.
Where Cryptocurrency Hacks Happen
When you own a cryptocurrency coin, you are the full owner of that coin. Each token is tied to a private key that only the owner is aware of — just like a credit card CVV number. While tokens and numbers can be hacked, this is highly unlikely given the encryption within and that it would take a lot of tries before anyone can get through that wall.
If you don’t control your own cryptocurrency passwords, you are pretty much useless when it comes to handling your own cryptocurrency, as anything can happen. Letting another person store your keys for you can open you up to many risks, as you’ll be giving that entity a lot of power over your coins and tokens.
You can literally use anything to record your passwords — paper or online, you name it. To make sure that your passwords are safe you will need to decide if you would like to put in in a hot or cold place and weigh each’s pros and cons.
All custodial key holders will tell you the level of security they advertise, but this requires a lot of discernment. There always is a weak spot.
Overall, exchanges hold cryptocurrency in their reserves to maintain liquidity, while also holding private keys for many customers. Exchanges thus become an extremely likely target for hackers who want to game the system. By targeting these exchanges, they can perhaps gain access to cryptocurrency keys. If in any case, you forget to store your private keys on an exchange, you might be safer as it makes it harder for hackers to access them.
How to Ensure That Your Crypto Is Secure
If you’re extra careful, there are many precautions you can take to safeguard your tokens and coins. You will need to understand what goes on behind the technology of cryptocurrency and understand how exactly your keys are stored, as well as how others can potentially access those.
Wallets that are the least secure are those that have a direct connection to the internet or another network. You will need to take note not to store your sensitive passwords on a device that is often connected to the internet. Those devices can be easily hacked and you don’t want to be a target of that.
In reality, you actually do not need to have a device that has been manufactured commercially to act as a wallet. Any USB thumb drive with encryption can work. The cons, however, is that USB connections lose their novelty after a while. In addition, once a cold storage device gets connected to a computer, it also becomes a hot device and could be compromised.
The most secure ones are the non-custodial cold wallets, which pretty much have it separated from any internet connection and are only visible to the main owner. There are many products that help you keep your passwords safe and sound.
Which Cryptos Have Been Hacked?
Traditionally, cryptocurrencies are tough to hack. Unfortunately, 51% of attacks exist and Bitcoin Gold (BTG), Bitcoin Satoshi Vision (BSV) and Ethereum Classic (ETC) have fallen victim to these hackers.
Can Someone Steal My Cryptocurrency?
It would be a big lie to say that cryptocurrency can’t be stolen. In order to safeguard your coins and tokens, you will need to take proper measures to secure and control your private keys.
Can Hackers Steal Crypto?
While tough, it is certainly possible for hackers to steal crypto. Cryptocurrencies have been stolen. Thieves typically target wallets, exchanges, and decentralized finance applications as all of these have certain weaknesses in their security and protection.
Cryptocurrency is a valuable item, and anyone who owns coins and tokens will never want to have their assets stolen. While it might be hard to break the code for private keys, it definitely is possible and a huge target to many thieves. If you would like to keep your coins safe, you will need to follow the advice on this page.