As cryptocurrencies gain widespread acceptance, there have been reports of various security threats in the cryptocurrency landscape. This article discusses the various security threats, including Phishing, 51% attacks, and many others.
Blockchain Technology is the underlying technology of cryptocurrencies. So, the level of threats in the cryptocurrency landscape largely depends on how fortified the blockchain technology security is.
Cybersecurity & blockchain frequently complement one another and are interconnected.
Blockchain-based solutions are intrinsically more secure than traditional systems because they use a distributed design rather than the conventional client-server architecture.
However, blockchains have their own cybersecurity issues and distinct attack avenues. These attack vectors might originate at the application and core blockchain levels.
This article will look at some of the key threats in the cryptocurrency landscape.
These might emerge due to design defects or unforeseen occurrences. Hence, the importance and quality of solutions vary depending on the type of vulnerability.
While most of these attacks appear theoretical or impossible to exploit, several have been successfully used, resulting in severe physical damage.
Let us look at some security threats in the cryptocurrency landscape without further ado.
Security Threats in the Cryptocurrency Landscape
Some security threats in the cryptocurrency landscape threaten the safety of financial activities.
Among the many threats in the cryptocurrency landscape, some are phishing attacks and 51% attacks.
Phishing Attacks
Phishing is one of the security threats in the cryptocurrency landscape. Phishing is a social engineering attack commonly used to acquire user data, such as login credentials and credit card details.
It happens when an attacker, posing as a trustworthy entity, tricks a victim into opening an email, instant message, or text message.
The recipient is then deceived into clicking a malicious link, which can result in malware installation, system freeze as part of a ransomware assault, or the disclosure of sensitive data.
An attack can have severe consequences. Individuals may experience illicit purchases, financial theft, or identity theft.
Also, Phishing is frequently used to gain entry into business or government networks as part of a more significant attack, such as an advanced persistent threat (APT) incident.
In the latter case, personnel are compromised to circumvent security perimeters, propagate malware within a closed environment, or get privileged access to protected data.
An organization that falls victim to such an attack usually suffers significant financial losses and a decline in market share, reputation, and consumer trust.
Depending on the scale, a phishing attempt may become a security catastrophe that an organization may struggle to recover.
How To Prevent Phishing Attacks
Both individuals and companies must take precautions to defend themselves from phishing attacks.
Users must remain vigilant. A faked message frequently includes minor errors that reveal its genuine identity. The previous URL example shows these can contain typographical errors or domain name modifications.
Users should also stop and consider why they are receiving such an email.
Some of the steps enterprises can take to mitigate phishing attacks include:
Two-factor authentication (2FA)
This is the most effective solution for preventing phishing attacks since it offers an additional degree of verification when connecting to sensitive applications.
2FA requires users to have two things: something they know, such as a password and user name, and something they own, such as a smartphone.
Even when employees’ credentials have been compromised, 2FA stops them from using them to get access, as these alone are insufficient.
Educational Campaigns
Education campaigns can also assist in reducing the risk of phishing attempts by promoting security practices like not clicking on external email links.
Strict Password
In addition to 2FA, enterprises should have tight password management rules.
Employees, for example, should be compelled to change their passwords regularly and prohibited from using the same password for various applications.
The next one among the many threats in the cryptocurrency landscape is 51% attacks.
51% Attacks
51% attacks are also a major in the threats in the cryptocurrency landscape. 51% attacks occur when a single entity controls more than half of a blockchain network’s staking or processing capacity.
This disproportionate control enables them to make significant modifications, which violates the blockchain’s core decentralized tenet.
In other words, a 51% assault grants the ability to modify transaction history, delay transaction completion, halt payments to validators, and double spend.
It is vital to remember that a 51% assault is one of the most serious security concerns to blockchains, especially those that use Proof-of-Work and Delegated Proof-of-Stake consensus algorithms.
One concerning effect of such an attack is double-spending, which occurs when the same coins are spent more than once, undermining the blockchain’s trust and trustworthiness.
How To Prevent 51% Attacks
Mitigating these attacks can be difficult; however, some approaches have been proposed:
Change of Consensus Algorithm
Switching to a new consensus method is a possible solution for minimizing the chance of 51% attacks.
Proof of Work (PoW), the first consensus process used by many blockchains, is vulnerable to such assaults due to its mining concentration risk.
Proof of Stake (PoS) Consensus
Alternatively, the Proof of Stake (PoS) consensus method is less vulnerable to such attacks because it needs a hacker to control the majority of the blockchain’s total stake, which is frequently prohibitively expensive.
Delaying Blockchain Confirmations
Another effective deterrent is delaying blockchain confirmations. This strategy buys time for the network to detect and maybe prevent a 51% attack.
By lengthening transaction confirmation time, attackers would have to maintain control of 51% of the network for longer, significantly raising the cost and difficulty of such an attack.
The Penalty System
Implementing a punishment system is another effective defensive technique.
For example, using slashing conditions in PoS blockchains penalizes malevolent players by taking some or all of their staked tokens if they violate the network’s rules.
This punitive action raises the stakes for any potential assailants and can be a strong deterrent.
Blockchain Protocol Audit
Finally, regular blockchain protocol audits are essential to any comprehensive security approach. These audits thoroughly examine the protocol to identify flaws, including potential paths for a 51% attack.
Blockchain developers can significantly strengthen their network’s defenses by proactively discovering and addressing these vulnerabilities.
Aside from phishing attacks and 51% attacks, other threats in the cryptocurrency landscape are;
- Sybil attacks
- DDOS attacks
Sybil Attacks
A Sybil Attack is an effort to control a peer-to-peer network by generating several phony identities.
To the spectator, these several identities appear to be regular users, but behind the scenes, a single entity manages all of these fake entities simultaneously.
This form of attack is vital to consider, especially when it comes to online voting. Another place we see Sybil attacks is on social media, where phony profiles can sway public opinion.
Another possible purpose for Sybil’s attacks is to censor specific participants.
A group of Sybil nodes can surround your node, preventing it from connecting to other honest nodes in the network.
This way, someone could prevent you from sending or receiving information over the network.
This “use case” for a Sybil attack is also known as the Eclipse Attack.
How to Prevent Sybil Attacks
This cost needs to be handled appropriately. It must be low enough to allow new members to join the network and establish legitimate identities.
It must also be sufficiently high enough that generating a large number of identities in a short period becomes prohibitively expensive.
The mining nodes in PoW blockchains are responsible for making transaction choices.
Creating a phony “mining identity” comes with a real-world expense, which includes purchasing mining hardware and using electricity.
Additionally, a vast number of mining nodes is insufficient to impact the network meaningfully. To accomplish this, you’d also need a lot of computing power.
The related costs make it difficult for Sybil to attack Proof-of-Work blockchains.
DDOS Attacks
A Distributed Denial-of-Service (DDOS) attack in computing occurs when a perpetrator attempts to render a network resource unavailable to its customers by flooding the network with a huge number of requests in an attempt to overload the system.
It is an attack that can affect any internet service, including blockchains.
In the simplest version, the DOS (Denial-of-Service) assault, all of these requests come from the same source. This makes it easier to prevent.
If a single IP address sends many requests that valid causes cannot justify, you can put a safeguard in place to block this address automatically.
In the case of a DDOS attack, the dispersed portion refers to the many diverse sources from which the malicious requests come.
How to Prevent DDOS Attacks
A DDOS attack is substantially more challenging to detect since it requires distinguishing between legitimate and malicious requests.
This is a complicated problem. In the case of blockchains, this boils down to an almost ideological question.
The aim behind implementing transaction fees was to eliminate spam. Some contend that the requests, including a transaction fee, cannot be deemed spam.
While there are occasions where transactions could be considered spamming, prohibiting them would be a slippery slope. The ability of public blockchains to defy censorship is one of their most valuable features.
Starting to filter transactions that are not included, regardless of the criteria used, would set a dangerous precedent for any blockchain.
Final Thoughts
As cryptocurrency gains widespread recognition, addressing security issues is critical to the digital asset ecosystem’s long-term growth and trustworthiness.
Collaboration among industry participants, regulators, and cybersecurity specialists is essential for establishing successful solutions that protect consumers from these threats in the cryptocurrency landscape.
