Online security has become a topic that no one can escape. Studies show that over 4,000 new attacks launch daily, so you definitely do not want to be a victim. And in the crypto industry, exchanges are now turning to more innovative strategies to improve safety. So, if you want to learn more about this, hanging around will really help.
Of course, digital currencies are already way more secure compared to traditional currencies. In fact, that’s the reason why organizations are adopting tokens like Ethereum to strengthen their security efforts further. It follows that as this adoption continues, the Ethereum price might increase because of more demand. However, as much as these tokens are more secure by themselves, there is an apparent need for crypto exchanges to ensure security. Read on to understand why this is so.
Why security is important for crypto exchanges
A recent Pew Research Center study noted that about 82% of people who are familiar with crypto claim not to be very confident in it. Another 63% of adults said they were not convinced that crypto is safe. Such statistics already mean that you have to do a lot if you have to stand out from other crypto platforms. Thankfully, you can begin to integrate various efforts that can give the impression that you’re attentive to online security, improving brand trust.
Looking at the broader e-commerce sector, studies show that about 75% of customers may never purchase from brands they don’t trust with their data. Therefore, you can imagine the benefits you can reap if your target audience perceives you as trustworthy and reliable.
As we have already noted, cyberattacks are on the rise. In fact, in 2024 alone, more than $2.3 billion worth of crypto was lost due to Web3 security incidents, a 31.6% rise from the previous year. And since cybercriminals continue to target this industry, more funds may be lost in the coming days.
This only highlights why you can’t afford to ignore your platform’s safety. Plus, do not forget about the recent developments that could encourage cybercriminals to target the industry more. Let’s take Trump’s win, for instance. As you may know, Bitcoin has broken historical records, surpassing the $100,000 mark recently. This bullish trend has resulted in more investors joining the sector. And now that attackers are always after customer data, this growing statistic makes the industry a prime target.
To add to that, recovering from cyberattacks has never been as expensive. Can you imagine that a recent IBM study valued this at about 4.88 million dollars? Is this an amount you’re willing to spend just because you ignore a few things? Definitely not! Read on to see some of the attacks you need to be careful about and what you can do to help you minimize exposure.
What are you to watch out for?
Phishing attacks
Have you ever been skimming through your email and noticed an address that seemed to look like an original but was not really it? This is what a phishing attack looks like. It’s a fraudulent communication that appears to come from a legitimate source, aiming to steal money and sensitive information and install malware. A 2023 report noted that approval phishing scams had been used to steal more than one billion dollars worth of crypto since May 2021.
And recently, a renowned institution reported that victims had lost up to $1.05 billion in 300 incidents to phishing scams. Given that a good number of incidents go unreported, you can imagine the amount that’s lost to this kind of attack. Another concern was the private key compromise, which accounted for a loss of more than $855 million.
Cryptojacking
Here, attackers exploit your computer to mine currencies without your consent and knowledge. It happens when you install a program with suspicious scripts, enabling criminals to access your computer secretly. But you may think that this is not so much of a crime because the only thing that seems to be ‘stolen’ is your computer’s power.
Well, you may end up paying more electricity bills and experiencing performance-related issues. If we were to consider the statistics, the first half of 2023 alone saw attacks of this nature grow to 332 million, a record 399% rise from 2022. The world is becoming more sustainability conscious, and experiencing attacks that make you appear contradicting is not something any crypto platform wants to dream of.
Other common attacks that you may want to check out include:
- DDoS attacks
- Routing scams
- Smart contract vulnerabilities
- Rug pulls, and so on
How can technology help improve crypto security?
As much as cyberattacks are on the rise, that doesn’t mean that we’re without hope. Various technologies have emerged with unusual abilities to minimize exposure to these many attacks. Here are a few:
Artificial intelligence
It’s almost impossible to think of one industry or sector where this intriguing technology is not making waves. Of course, this would not be possible if the technology was not tailored to address modern needs. Artificial intelligence boasts a dynamic computational ability that can crunch huge amounts of data in a matter of seconds and provide meaningful insights in real time.
Let’s take a platform like OKX, for instance. This popular trading platform claims to have over 60 million users. Assuming that one of those users was performing a suspicious activity, how would you detect that in real time? Well, humanly speaking, that’s near impossible – but not with artificial intelligence. Its associated machine-learning models can analyze patterns and detect anomalies in real time, allowing swift and immediate responses.
When it comes to smart contracts, AI can help audit, flag vulnerabilities and recommend fixes before malicious persons take advantage of them. And in a time when efficiency is critical to the success of businesses, this technology can really be handy. In addition to that, artificial intelligence can predict the likelihood of scams like DDoS attacks, which may act as an early warning system.
Multi-layered security strategies for crypto platforms
We have moved from the days when attacks were just simple viruses and worms that would slow a device’s operation to the days when they are more advanced. Most of them target critical data and infrastructure and have outgrown traditional security measures, which mainly depend on single-layer security strategies like firewalls and antivirus software. This means that as cybercriminals continue to advance, you should also improve alongside them.
And this is why multi-layer security methods are necessary. By the way, are you actually aware that 2FA alone can reduce exposure to phishing attacks by up to 96%? The best part of such multi-layer infrastructures is that if criminals compromise one layer, the other layers can prevent further harm.
You want to implement several security measures that can work in harmony to fight off particular vulnerabilities at specific points. You may wish to achieve this by dealing with the first line of defense, which is the perimeter. Methods like secure gateways and intrusion detection and prevention systems can really help with this.
At the network security level, you want to ensure the integrity and confidentiality of data traversing across your network. Encryption, secure protocols and network segmentation can really help with this. At this point, ensuring users can provide two or more verification methods before logging into their accounts is important. Such an infrastructure contains the following:
- Something that’s known, either a password or PIN
- Something users have, like a smartphone or hardware wallet
- Something users are – that’s their facials or fingerprints
Can crypto bug bounties help?
In these programs, crypto platforms reward people for detecting and reporting security issues. The idea is to have ethical hackers help you identify flaws so as to fix them before attackers can exploit them. Remember, blockchains usually operate without centralized authority – which can be attractive for some malicious activities. However, by using the knowledge of the global community, bug bounty programs help maintain the network’s integrity.
A more relatable case is the 2021 Poly Network’s flaw, in which white hat hackers stole about $610 million. Since the goal of this hack was to reveal vulnerabilities rather than cause harm, the individuals returned the funds, after which Poly compensated them with about $500,000. The company also welcomed them to act as their chief security advisors.
Big bounties can also be a great way to build user trust, as investors can clearly see that you prioritize security and transparency. And as we have already noted, building user trust can really be a great competitive advantage. Collaboration between platforms and the cybersecurity community is also strengthened, establishing a secure ecosystem for participants from both sectors. Plus, once you identify risk early, you can always implement corrective measures ahead of attackers.
There are several reports you can receive, including:
- Smart contract exploits, which can help you know whether the contracts are poorly coded
- API vulnerability reports with details like improper authentication, data leaks and so on
- Reports about wallets, deposits and withdrawals
- User experience reports, etc.
Wrapping up
The discussion about cybersecurity continues to draw the attention of multiple crowds as criminals continue to diversify their strategies. In fact, it’s becoming very risky to survive in today’s digital space if you don’t pay special attention to cybersecurity – just a simple mistake could cost you millions of dollars. And besides incurring financial losses, you risk injuring your reputation.
Users have become very discerning about online safety, so you want to ensure that you’re consistent with their needs. The crypto industry is growing rapidly, and now that Trump has risen to the presidency, many investors will likely join the sector. This could make it more attractive to malicious actors because of the increased customer data.
But thankfully, technologies like artificial intelligence and multi-layered security protocols are helping crypto platforms to strengthen their security efforts. Cyber activity could increase in the crypto industry this year, and you don’t want to be a victim of something you could have otherwise avoided.
