Cryptocurrency is a digital currency that uses cryptographic techniques to enable secure transactions. The transactions of cryptocurrency are stored in digital ledgers known as the blockchain, a platform ensuring enhanced security and safe transactions of cryptocurrencies. The blockchain allows everyone to see the transaction data but no one can access or make changes to them due to the immutable nature of blockchain.
However, many question the security of cryptocurrency transactions, and whether they are prone to hacks and scams. Continue reading to learn about the safety of crypto accounts and wallets.
Are Crypto Wallets and Accounts Prone to Hacks?
Yes. Though crypto wallets and accounts exist on a secure blockchain platform, they are prone to hacks and scams. Since crypto wallets are programmed by humans, finding loopholes to break or decode the programs is not that difficult.
Hacking a crypto wallet means accessing the private keys and using them to transfer money from the user’s account to the attacker’s address. The encryption technology used in blockchain allows one to encode transactions. The data are stored in blocks and are interconnected with each other making it impossible to make changes. Thus an existing blockchain can’t be hacked.
Generally, hackers insert malicious code into the blockchain to alter the codes. If a hacker gains control over the majority of hash rates (computational power of blockchain), he can introduce a modified blockchain to the system, allowing them to make changes to the transactions that were not confirmed by the blockchain before the insertion of the malicious code.
Why Crypto Wallets Are Hacked?
This question may arise often in most crypto trader’s minds. The main reason for hacking a crypto platform is the weakness in private keys and the way they are stored. Allowing someone to store or access your keys is similar to giving control over your cryptocurrencies. Crypto wallets store the private keys in the device’s applications and wallets. Since the devices and applications that store the private keys can be hacked, cryptocurrencies can be stolen.
The exchange of cryptocurrency allows many other customers to access private keys, making them prone to hacks. If you prevent storing private keys on an exchange, they are less likely to encounter an exchange hack.
How Crypto Wallets Are Hacked?
Crypto wallets are hacked by accessing the private keys, and this can be done using different techniques.
1. Phishing
Phishing is one of the easiest and most popular ways of hacking a crypto wallet. By using this technique, an attacker tries to gain access to the private keys by implementing fake apps or wallets. Once the user installs the app and enters the private keys, the hacker copies them and accesses the user’s account to make transactions.
2. Computer hacking
Many users store their private keys on computer devices. Since there are a large number of apps on computer devices, they are highly vulnerable to potential hacks. Once the attacker accesses admin information like passwords, he can search and retrieve the private keys stored inside.
3. Mobilephone hacking
Digital wallets are generally installed on mobile devices, hence they are targeted by hackers. By exploiting the vulnerability of operating systems, hackers access the private keys. However, due to the automatic and short system updates, accessing the private keys through mobile devices is difficult.
4. Exploiting wallet vulnerability
Since wallets are man-made programs, finding vulnerabilities in them is easy. By exploiting the vulnerability, hackers access the database and private keys.
5. Keylogging
Keylogging is a hacking technique in which a hacker records all the user’s tape on the keyboard. The attacker installs a keylogger in the computer system and waits for the user to write the information. Keylogging generally occurs when logging in using public computers.
6. Social engineering
It is a technique in which a hacker exploits the vulnerability of the user, allowing them to access the user’s system or send the credentials. This hacking technique is generally used in combination with phishing.
How to Secure Your Crypto Wallet?
A user can adopt different methods to prevent the chances of hacks. The basic factors include storing the private keys securely and preventing unauthorized access.
- Never store private keys on a device that has an accessible connection.
- Instead of hot wallets, use cold wallets, which are the most secure.
- Always keep your private keys in cold storage.
- Never share the private keys with anyone.
- Check the devices at regular intervals to ensure no degradation is happening.
Final Thoughts
Securing a crypto wallet is mandatory as it leaks the private keys resulting in hacks and money looting. Though cold wallets are more secure than hot wallets, their effectiveness depends on the frequency and speed of transactions. To avoid the chances of hacks, avoid sharing private keys with anyone and try to avoid installing unauthorized apps.