I am writing this post for Professor @gbenga (Nigeria ) homework week 5 about a security problem with cryptocurrency.
We shall start with common problems such as plain old theeft. Let us say you are tansferring money to a friennd. You must copy hiswallet address accurately, but malware reeplaces the wallet address in te clipboard with another one. Not every user is ready to check an ddress after copying it. Especially if the address is a long jumble of characters.
Or take phishing, for example. Like regular e-money, users can be tricked into going to a phishing site where they upload their crypto wallets and enter passwords.
Of course, users of banks or traditional payment systems can also have problems through cybersecurity. However, with a traditional system there is always a good chance of canceling the transfer. In the case of cryptocurrencies, you can also try complaining to the United Nations. Everything that happens on the blockchain lives on the blockchain.
1. Hack payment gateways.
Also, even using a real payment gateway with the correct address can cost you money. In June 2017, the most famous web wallet for the Ethereum Classic cryptocurrency, with the original address.
It turns out that the most informed information uses social engineering methods to make it easier for the hosting providers that they are due to the real domain. Elimination of the accusation, how to detect the effective flu.
Affordably, the strategy used by these news pirates was not the best - they quickly switched payers, because they quickly lost their tapestry and lost only $ 300,000 in horoscopes. If the cartridges fell back and the spear spilled some more, it would not be too late for the moment and the day would be too late.
With all due respect, even classic financial services can come under attack. In Brazil, for example, hackers hijacked an entire bank this year.
2. The address error by users.
The previous cases have been about ordinary electronic money, but as we already said, cryptocurrencies have put their wrinkles. For example, there is a risk that is very specific with cryptocurrencies, due to an error in the direction of transfer of the address.
In the case of Ethereum, if the last digit of the address had not been copied, the amount would have been lost. Or go where you want to go, but the amount you want to transfer will be 256.
This error is not related to bitcoin. Your system has built-in address verification. However, in bitcoins, you can send money to a puzzle recipient - how are you affected by the loss of 800 bitcoins? (Which is approximately $ 3.2 million at the exchange rate of September 28, 2017). Or you can unknowingly pay a fee of 80 bitcoins (roughly ، 320,000). To be fair, this type of mistake is not possible with a popular bitcoin client. In these cases, it happens that people are using something at home.
3. Sometime loss of wallet file.
There is another problem with cryptocurrencies: lost or stolen wallets. Most of the users keep their cryptocurrency wallet files on their computer. Therefore, they can be stolen or misplaced with malware as a result of a hard drive failure.
Therefore, more advanced users make hard copies of their secret key and buy USB hardware wallets. But the number of these users is small.
The situation with "centralized" electronic money is much better now. This is a rare Internet bank that does not require two-factor authentication and SMS transaction authentication with one-time passwords. And corporations, or in large numbers, must use USB tokens.
4. Unsafety from ICOs.
Investing in projects related to a blockchain or cryptocurrency became very popular in 2017 with cryptocurrency holders. This type of fundraising is called an initial ICO coin offering.
You can learn more about how all of this happens, what the Ethereum network is, and how smart contracts work, in our previous post on this topic, so we won't repeat the technical details here.
As a result, the use of cryptocurrencies has made it easy to raise provocative money with nothing more than an internet connection. Over $ 1.7 billion has already been raised through ICOs in 2017. You don't hear much about successful projects, but investors remain bullish.
So what is the problem? The problem is that the cryptocurrency market is not yet regulated in any way, there is no risk assessment mechanism, and there is no guarantee - just like - the return on investment, except that those in honor of those who came with this purpose. Draft
In general, the fact that someone has an idea does not mean that the idea is good or even possible, the result is that the resulting product will benefit, or that the author will in fact pay to pay the director to implement it (himself ). After all, you can probably make money, knowing that finding a payer in the cryptocurrency market is not easy.
Sometimes the monetization scheme is even simpler. Fundraising at ICOs usually opens at a set time and closes when the required amount is raised. The collection address is published on the project website when it is opened (this is not necessary, just general practice).
During an ICO, a hacker gained access to the project website and took the place of the address as soon as the recovery was opened. In one hour, 2,000 participants contributed 8 million. This address was later marked as false. But it didn't stop curious investors: Many of them continued to transfer money to the same fake address, and the hacker received another 2 million that day.
Here are some tips for crypto holders and cryptocurrency investors
How can you avoid the problems mentioned above? We have some tips to help you.
. Always check the address of a web wallet and do not follow the links to internet banks or web wallets.
. Before sending, check the recipient's address (check at least the first and last letters), the amount to send and the associated fee.
. Write a note to help you recover a crypto wallet if you lose it.
. When investing in cryptocurrencies, keep a cool head and make informed decisions, and don't panic or rush.
. Always remember that investing in cryptocurrencies is very risky. Be prepared to lose at any moment, do not invest more than that. Diversify your investment.
. Use the cryptocurrency hardware wallet.
. Run high-quality virus protection to protect the devices you use to access crypto wallets, trade on crypto exchanges, and more.