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Cybersecurity Threats in Cryptocurrencies

What are Cybersecurity Threats in Cryptocurrencies?

Cryptocurrency is an electronic form of virtual currency secured by cryptography and other encryption technologies. Cryptos, which are also referred to as tokens, can be traded for goods and services. The key feature of cryptos is that they are not issued by authorities (centralized), and therefore they cannot be manipulated or controlled by the government. The majority of cryptos are decentralized using blockchain technology where the blockchain works as ledger that stores the individual coin ownership in the form of record-keeping network of computers.

An increasing number of businesses are using cryptocurrencies such as Bitcoin for transactions, business operations, or other business purposes. As cryptos become a more mainstream form of currency, it is important to recognize the associated cybersecurity risks. Cyberattackers are keen to prey on cryptocurrencies as the industry has yet to establish business norms and legal structures for their management and governance, making them vulnerable targets. Potential cybersecurity threat to cryptos include:

Platform hacking. Cyberattackers who hack into trading platforms where they can steal funds or steal application programming interface (API) keys from the trading platform that can be used to program bots to withdraw funds form the account or to perform fraudulent transactions.

Registration form compromise. Cyberattackers can inject code into registration forms where they can obtain personal information that they can either sell on the dark web or use to create accounts on other trading platforms.

Third-party apps. Third-party applications are often used by traders to monitor cryptocurrency markets and calculate profits. If a trader’s portfolio is shared with the application developer, and the application developer becomes a victim of a cyberattack, the trader’s personal information could be compromised.

Phishing. Phishing campaigns target trading platforms with the primary goal of stealing user credentials that cyberattackers can leverage to obtain profit or ransom.

Malware. Cryptocurrency mining requires significant computer resources as they require both substantial computational capacity and consume a lot of power. Cyberattackers target these powerful computers by installing mining malware designed to leech their abundant resources. Malware may also directly steal cryptocurrencies from wallets or install malicious tools that appear legitimate.

Weak smart contracts. Smart contracts are digital contracts stored on a blockchain that are automatically executed when predetermined terms and conditions are satisfied. If the smart contract code that prompts an automatic transaction is weak, cyberattackers could interfere and divert cryptos for their own use.

Trading bots. Cyberattackers design trading bots that appear legitimate, but once a user downloads it their device becomes infected with coinminers or other malware designed to use up computer resources.