Earning on the cryptocurrency market is not difficult. The most important thing is to protect what you’ve earned. While you’re focusing on successful deals, scammers are watching you. Don’t let them profit off you — here’s an action plan in our infographic.
Rise in Theft Incidents
33% of Bitcoin exchanges were attacked between 2009 and 2015.
10% of ICO funds were stolen or lost due to hacks.
Main Methods of Cryptocurrency Theft in 2017
1. Phishing (fake websites) — $115 million.
2. Software and storage system errors — $103 million.
3. Hacks — $7.4 million.
4. Financial pyramids — $4,000.
High-Profile Exchange Hacks
2014 Mt. GOX — $473 million.
Believed to be hacked by Russian hacker and BTC-e exchange owner A. Vinnik.
2016 BITFINEX — $72 million.
Stolen due to vulnerabilities in multisignature wallets.
2018 COINCHECK — $530 million.
Stolen due to very weak security of hot wallets (without multisignatures).
Main Methods Used by Crypto Hackers
1. Brute Force Method
Automated systems attempt to guess passwords by trying all possible combinations. If successful, the hacker gains access to the funds.
2. Phone Hacking
A call to customer service to link your number to the hacker’s SIM card, allowing access to reset passwords and steal funds.
3. Phishing or Fake Websites
Fake messages via social networks and emails containing malware that hacks poorly protected computers.
4. Financial Pyramids
Through multilayer marketing, scammers collect cryptocurrency while offering bonuses for recruiting new participants.
5. Miner Program Hacking and Resource Theft
Hackers infect miner programs or embed mining code into ads, using visitors’ devices to mine crypto without their knowledge.
Currently, there are 1,500 cryptocurrencies and 8,000 trading platforms globally. The market is always changing and unpredictable. Therefore, efficient trading requires high security and a solid action plan.
Today, there are many cryptocurrencies. How do you choose the safest ones?
The most well-known — Bitcoin and Ethereum.
Bitcoin
➕ Universally recognized, boasting a large user base and good security.
➖ Vulnerable to 50% attack — if users controlling more than half the network’s hash power gain control of transactions.
Ethereum
➕ Uses smart contracts and decentralized apps (DApps) for quick and secure transactions.
➖ In July 2017, weak smart contract security led to the Parity startup hack and a theft of approximately $30 million in ETH.
Exchanges
COINBASE
➕ No major hacks recorded.
➖ Some individual user accounts were compromised.
BITFINEX
➕ Daily encryption, archiving, and data backups.
➖ About $66 million was stolen. Hackers breached the BitGo wallet that had multi-level security protocols.
Storage
Hot Wallets
These wallets are directly connected to the internet. They store small amounts of cryptocurrency for daily use.
Online Wallets
Small volume of transactions and storage.
Accessible from any secured device using just a password and email.
The most popular hot wallet — Blockchain.info.
Mobile Wallets
Higher transaction volume but still low storage capacity.
Modern smartphones and updated operating systems are essential.
Cold Wallets
Cold wallets are offline storage, protecting large amounts of cryptocurrency and private keys.
Paper Wallets
Low transaction volume but high storage volume.
Private keys are printed on paper, removing any computer memory risks.
Hardware Wallets
Highest transaction and storage capacity.
Ledger
Trezor and FIDO U2F key.
Physically Isolated PCs
These computers have no internet access. Access to private keys is managed through flash drives or other storage devices.
Despite all precautions, even experienced crypto traders can fall victim to hacks.
The most reliable protection is always staying one step ahead.
Ways to Protect Against Cryptocurrency Theft
1. Avoid fake websites and links; always verify certificates.
2. Secure your computer by installing port management programs on physically isolated PCs.
3. Disable SMS authentication and email recovery services.
4. Use safety deposit boxes for storing USB drives and paper keys.
5. Create complex passwords and spread your assets across several platforms.
6. Store small amounts in hot wallets and the majority in cold wallets.
Whether you’re a beginner or an experienced crypto trader, remember: protecting your cryptocurrency from theft is the first step toward success.