Crypto has gained immense popularity in recent years as a form of digital currency.
However, with this popularity comes a range of security risks that users need to be aware of in order to not lose their funds. In this article, we’ll go over 5 different ways that crypto can be hacked, including private key theft, 51% attacks, and more.
Understanding these risks is crucial for anyone who invests in crypto, so take notes!
#1 - Private Key Theft
Private key theft is the most common way that crypto is stolen. Private keys are used to access a user's cryptocurrency holdings and if these keys are stolen, the thief can access and transfer the user's funds.
It is crucial for users to store their private keys securely and to use trusted wallets and exchanges to reduce the risk of theft.
There’s a handy phrase here to help you remember - “not your keys, not your crypto” - meaning that if you ever give someone your private keys, like an app or a website, that means they now officially own your crypto and you don’t.
#2 - Exchange Hacks
Crypto exchanges can be targeted by hackers who try to steal the funds held on the exchange - and sadly, this happens far too often.
In many recent cases, exchanges have been hacked, and users have lost all of their funds. That’s why it’s essential for users to research exchanges before using them and to ensure that they have adequate security measures in place, such as two-factor authentication and cold storage.
Better yet, get your money off exchanges altogether! Honestly speaking, the best way to keep your crypto safe is by keeping it on a cold wallet. Cold wallets are always worth it and could save you a lot of money, make the purchase!
#3 - Smart Contract Vulnerabilities
One of the most common ways investors lose money is through smart contract, which are defined as self-executing contracts that are written in code and can be used to automate the execution of transactions.
However, smart contracts can have vulnerabilities that can be exploited by hackers. If a company is lazy or lacking effort in the development stage, they can very easily be compromised by a team of hackers with experience.
#4 - A 51% Attack
In a 51% attack, a single entity or group of entities gains control of over 50% of a cryptocurrency network's computing power, which then allows them to manipulate transactions and ultimately steal customer funds.
This type of attack is particularly concerning for smaller cryptos that have less computing power, which is why it’s crucial for cryptocurrency networks to have strong security measures in place to prevent these strategic attacks.
#5 - Phishing Scams
Phishing scams are scams as old as time, and involve hackers trying to trick users into giving away their information, passwords or private keys through fake emails, fake websites, or fake apps that try their best to appear legitimate.
To counter this, it’s essential for users to be cautious and to never click on links or download attachments from unknown sources. It’s also important for you to use two-factor authentication wherever possible and to keep software up to date to reduce the risk of phishing scams.
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