So you’ve been hacked. Your bags of cryptocurrencies are gone. Stolen by some nefarious neckbeard dwelling in a dark basement. Now what?
First of all, calm down. You’re not alone.
There’s an article in Forbes by Jeb Su and the title tells us all we need to know: “Hackers Stole Over $4 Billion From Crypto Crimes In 2019 So Far, Up From $1.7 Billion In All Of 2018”
That’s a lot of money. And it came from thousands of people around the world. How?
“Many breaches involve blended attacks in which hackers employ multiple techniques— including SIM swapping, phishing, URL hijacking, etc.—against multiple targets to take over user and administrator accounts, which increasingly are pulled off with the assistance of a compromised insider.”
These are only some of the techniques they use. In this article we’ll take a quick but solid look at a few blockchain and crypto security issues you might face this year. We’ll learn a bit about them and then present methods for protecting yourself against them.
Here we go.
Exit Scams — How to Detect and Avoid.
Exit scams are some of the most difficult to prevent against, so we’ll tackle them first.
A Forbes article defines them this way:
“To put it simply, an exit scam is when scammers launch a new cryptocurrency based on a promising concept. typically detailed on a “white paper”, then raise money from investors through an initial coin offering (ICO) before disappearing with the investors’ funds.”
This is one of the more difficult types of scams to protect yourself from. Sure, some people might think they “have a nose” for sniffing out exit scams. Some people might pride themselves on never falling for BS like that. But as the old saying goes: pride comes before the fall.
A notorious example of exit scams happened in early 2019. A company called Quadriga Fintech Solutions had been operating as a bitcoin and cryptocurrency exchange for Canadian customers. They had over 115,000 customers who had deposited cryptocurrencies worth,at the time, $190 million USD.
The CEO, Gerry Cotten, died in India.
According to an article in Vanity Fair, “Cotten was the only person with the passwords to the accounts holding Quadriga’s funds—cryptocurrency and cash—worth approximately a quarter billion U.S. dollars. Nobody knew how to find the money.”
Why could this have been an exit scam? Because he may not have died.
Investigators haven’t shut down the case. They’re still trying to verify the death certificate and all the details. The whole ordeal is dragging on and all those customers are still waiting for their hard earned money — if it ever comes.
Of course, it could have been all real. But the point still remains: the best way to avoid an exit scam is to always keep full control of your funds.
There’s a saying in crypto: “If you don’t own your keys, you don’t own your crypto.”
So make sure to have control of your cryptocurrencies at all times.
Avoid Hacks — Get the Right Tools
Reuters has also been reporting on billions of dollars lost due to scams and hacks. And the stressful thing is that even if you have complete control of your cryptocurrency keys — you could still lose it all due to hacks.
A hack is when someone gains access to the places you store your cryptocurrency keys.
You might feel safe keeping your cryptocurrencies on your phone, but what if someone pickpockets your phone and gets into it?
Or perhaps you own a fancy Trezor or Ledger hardware wallet. Well, unfortunately, a leading cybersecurity firm published research showing that those can be hacked as well.
It seems that perhaps the safest method of storing your cryptocurrencies might be in a “cold wallet” — a wallet that’s always offline — that you make yourself.
That can be as simple as writing down your private key on a piece of paper and storing it in a safety deposit box to as complex as building your own USB wallet.
The choice is yours, and it might be one worth thinking about.
The Best Method of Crypto Protection: Education.
It may sound cheesy, but the best method of protecting your crypto comes down to staying educated.
Maybe if you own only a little bit of bitcoin and losing it wouldn’t stress you out too much, then you can go ahead and keep it in risky but convenient places.
But if you have an amount of bitcoin that, if you lost it, would send you into a spiraling depression — then perhaps it’s best to stay educated about blockchain and crypto security issues.
There are places that keep their cryptocurrency news fresh and focus on educating the public. Find them, follow them, and keep your head on your shoulders.
Bitcoin may be a decade old now, with plenty of infrastructure, but in some ways it’s still a Wild West out there.