Hackers are always working on ways to steal money and data from individuals and businesses. Due to the massive increase in the value of cryptocurrencies in the last five years, cybercriminals have devised means to attack digital currency users.
Since cryptocurrency wallets are anonymous, hackers find the crypto-hacking niche comfortable. They use a variety of methods to attack cryptocurrency traders and holders.
Different Ways Hackers Use to Steal Cryptocurrency
1. Hacking Digital Currency Trading Platforms
One of the significant ways hackers steal cryptocurrency funds is by attacking exchanges. Exchange wallets hold a mass of cryptocurrency running into billions of dollars and, as such, serve as juicy targets for cybercriminals.
In May 2019, Binance, the top cryptocurrency exchange, was hacked with $40 million stolen. In 2018, Coincheck, a Tokyo-based exchange, experienced a $500 million theft. Mt. Gox, the first significant cryptocurrency trading platform, was hacked twice in 2011 and 2014, with at least 1.35 million Bitcoins lost.
Hackers have come up with different styles of malware to gain cryptocurrency. For instance, there is a type of crypto-theft malware that modifies a digital currency’s wallet address. If you attempt to send cryptocurrency on such a computer, the address would be changed to that of the attacker.
Cybercriminals also take advantage of the fact that crypto traders seek effective trading tools. They could sell trading tools or bots that contain malware to digital currency users on various forums.
Another popular kind of malware is crypto-mining malware. This malware effectively slows down the activities of a computer due to cryptocurrency mining running in the background
3. Malicious Third-Party Applications
Cryptocurrency users use third-party applications for several reasons. Active traders use them to get price alerts, calculate ROI percentage, calculate liquidation levels, and so on.
Hackers understand that these applications need your user data to operate efficiently. Hence, they create malicious third-party apps. Once they get data from you, they sell them to illegal groups, corporations, or individuals.
Protecting your Cryptocurrency: Steps to Take
1. Use Multi-Signature Wallets and Activate Multi-Factor Authentication
This step is tailored for active and passive cryptocurrency traders. For passive digital currency traders who rarely touch their cryptocurrency, a multi-signature wallet protects you from the numerous hacks that occur in the crypto space.
This type of wallet needs at least two major signatures to authorize a cryptocurrency transaction. You could use your signature with that of another trusted individual or entity. This way, even if hackers gain access to your exchange wallet, or try to force you to open your hardware wallet, their efforts would prove futile.
Active traders that buy cryptocurrency coins and tokens actively or engage in perpetual futures trading do not have the luxury of using multi-signature wallets. The best option for them would be to activate two-factor authentication for their accounts.
Two-factor authentication requires another passcode to access an account after the usual password has been used to sign in. It protects your cryptocurrency funds even after your password has been compromised.
2. Install a VPN
A VPN or Virtual Private Network is a tool that shields your device from spying by hackers. What VPNs do is encrypt your traffic and hide your IP address, ensuring you are secured from tracking and spoofing by advertisers, hackers, or even your government.
3. Utilize an Antivirus and Anti-CryptoMining Extensions
To protect your computer from crypto-related malware, avoid visiting shady websites. These websites sometimes offer tools or fake profit-trading bots to infect your system with malware.
Download an antivirus to detect if you have crypto-mining malware on your computer. Anti-crypto mining extensions also make sure your browser never hosts a malicious browser extension.
Make sure you also download third-party applications from trusted app stores.
Hacks ensure that crypto users are left with little or no cryptocurrency regardless of the percentage gains made. To protect your hard-earned digital currency funds from cybercriminals, you need to take specific steps.
You can start by using multisig wallets, activating multi-factor authentication, using a VPN, an antivirus, and anti-crypto mining extensions.