Before, during, and even after using cryptocurrency exchanges, some cryptocurrency users have been known to show distrust and hesitancy. This is frequently attributed to poor user experiences, poor trading experiences, and, most importantly, security issues. Just a quick glance at the news will show examples of exchanges being hacked, cryptocurrencies being stolen, and funds never being recovered. It's clear that the community's fears about cryptocurrency security aren't completely unfounded.
Security Concerns on Exchanges
Exchange hacks are widely publicised, which, understandably, instils fear in users. The Mt Gox hack is one of the most well-known hacks in history. When the exchange was hacked, it was rumoured that it lost about 750,000 of its users' Bitcoins, as well as 100,000 of its own, forcing it to file for bankruptcy. Mark Karpeles, the CEO of Mt Gox, was also on trial for allegedly stealing bitcoin from his clients. Hackers can attack exchanges in a number of ways. Traditional hacking, ransomware, and phishing attacks are among them. Simple things like giving out your password or clicking links in email scams will put your cryptocurrency at risk.
This worry can be easily alleviated if you follow protection best practises. Your choice of exchange partner is also crucial. Choose one that prioritises security and customer service. Two-factor authentication, an always-on customer support team that can help with any questions, and a company that prides itself on accountability are all things to look for.
Cryptojacking
Cryptojacking is when hackers try to use your phone's computing power to help them mine cryptocurrency, causing your phone to slow down dramatically.
Mobile mining is currently inefficient, especially when compared to PC mining. However, if mobile mining ever becomes as efficient as PC mining, phone hacking will become a much bigger problem. Cryptojacking is also a problem on PCs, and the problem with such hacks is that they are difficult to detect. The hacker reaps the benefits, while the victim gradually sees their computer slowing down, and in most situations, the victim has no idea what is going on. Since it isn't malicious, at least not in the same way that requesting payment is, the target won't notice the system slowing down.
Identity Fraud
Anonymity is a big part of this world. While blockchains pride themselves on being transparent, there is almost no identifying information used when it comes to money. This helps to keep people safe from hacking and theft. However, this does not guarantee complete security.
Blockchain forensic analysts, for example, are used to track down fraudulent transactions. Illicit trades can range from ransom payments to money laundering to drug trafficking. Blockchain forensic analysts study the blockchain and follow a thread until they find the point where the defendant bought fiat for the first time.
This is both comforting and worrying. On the one hand, the fact that criminal acts will not go unpunished is reassuring. Privacy, on the other hand, is critical. If a legitimate trader was making large transactions and not committing any offences, but was nevertheless found by an analyst, the violation of privacy becomes suspicious. It goes against one of crypto's founding principles.
Social networking is another problem of identification. People with clout in the cryptosphere can choose to use a pseudonym. If they own a lot of crypto, one justification for doing this is to shield themselves from a possible hack. If they've been posting on Twitter, for example, they're likely to be discovered. Before hacking a person's crypto accounts, a serious hacker will be able to access their Twitter account and decide the person's real name.
DDoS Attack
A distributed denial of service (DDoS) attack is a form of cyber-attack in which the attacker attempts to interrupt a system or service in order to make it temporarily inaccessible to its intended users. They accomplish this by overwhelming the target with incoming traffic from a variety of sources. As a result, stopping the attack at a single point becomes difficult.
This type of attack can cause a cryptocurrency exchange to go down, causing traders to panic. As soon as traders start selling their crypto at a low price, attackers rush in to buy it all. DDoS attacks sometimes threaten exchanges. DDoS attacks can easily manipulate markets, so this is an obvious security issue for many.
51% Attack
A 51 percent attack is a blockchain cyber-attack in which a group of miners combines more than 50 percent of the network's mining hash rate or computing capacity.
This will pose a significant threat to the network of a cryptocurrency. If a group ever gained so much power, it could potentially exploit transactions by mining illegitimate blocks or creating double spending problems.
Naturally, having so much control over a network is difficult. If two pools with 25.5 percent computing power on a network were to collude, they would obtain 51 percent leverage over the network, but this would be highly immoral and impossible. Nonetheless, it is a matter of concern.
