Though blockchain technology is generally secure, it can be compromised in certain situations. Bitcoin attacks can result in compromised personal data or stolen money. Learn more about the blockchain vulnerabilities in cryptocurrencies below.
Fraud is a vulnerability for any financial system and can happen in online marketplaces if a platform misappropriates its client’s funds. It can also occur with initial coin offering (ICO) scams. With a false ICO, an investor transfers bitcoins to a recipient who they believe is a legitimate ICO campaign. In reality, the recipient doesn’t make any investments and keeps the Bitcoin for themselves.
Private Key Security Attack
A private key is a unique code that allows investors to access their funds and transactions. Private key security attacks involve hackers recovering private keys (or wallet keys) and using them. Unfortunately, tracking criminal activity from a stolen private key is difficult.
Bitcoin marketplaces can experience a data breach where hackers steal login credentials and use them to transfer bitcoins to themselves. Luckily, sufficient network protocols can prevent bitcoins from getting lost.
Phishing schemes use false emails or website interfaces to trick users into giving hackers their login credentials. A hacker could create a realistic email pretending to be a legitimate company and embed the email with fake hyperlinks asking users to verify their login information.
SIM Swap Attack
SIM swapping is designed to undermine two-factor authentication (2FA) security protocols. Here is how a SIM swap works:
- The hacker obtains the victim’s phone number.
- The hacker calls the victim’s mobile network operator pretending to be the victim. They’ll ask to transfer the victim’s phone number to a new SIM card.
- Once the phone number is transferred to a new SIM card, the hacker will receive the victim’s calls and texts. This access means hackers can use account recovery features to change account login details since they’ll receive the SMS authentication text.
In a routing attack, a hacker intercepts a real-time data transfer by dropping the connection or hijacking the IP prefix. This interception prevents the system from completing the transfer and gives the hacker access to confidential data or currency.
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