Since its inception in 2009, cryptocurrency has gained significance as a viable and legitimate medium of transaction due to its adoption of peer-to-peer (P2P) architecture to perform transactions without oversight by a governing body. The result is a decentralized, anonymous, and faster service that needs to comply with minimal regulations. For the uninitiated, cryptocurrency is a virtual form of currency that can be transferred between peers without the presence of a governing third party, such as a banking system. As of 2022, over 10,000 varieties of cryptocurrencies are in circulation, with the most prominent being Bitcoin, Ethereum, Tether, and BNB.
A basic requirement for performing a cryptocurrency transaction is a crypto wallet. Unlike the regular wallet that holds physical money, a crypto wallet only contains cryptographic credentials—public and private keys—that are required to authenticate the user's cryptocurrency ownership held in the public ledger and to initiate further transactions. There are two types of crypto wallets:
Also known as cold wallets, hard wallets are portable physical devices that store public and private keys. Due to its tactile nature, a hard wallet can also be accessed offline and its contents can be isolated from external networks. Hard wallets must be plugged into a device before usage.
A software solution, i.e., a soft wallet can be a website or an application that stores the verification keys required to access blockchain. Unlike hardware wallets, soft wallets are functional only in online mode, and the key-related information is stored, managed, and formatted in a cloud-based environment.
The public ledger, also known as a blockchain, is a platform that hosts transactional activity and stores the records related to them. Crypto wallets broadcast transactional information to be verified by a group of participants called miners, who compete against each other to create an algorithm-based record of the transaction, known as proof of work, and add it to the block of information after prior consensus with other nodes. Miners are rewarded accordingly for securing proof of work, as it is an energy intensive process that requires highly advanced computing systems.
A blockchain is pseudo-anonymous, i.e., the user identity is linked to their respective public key and public address, as opposed to their username, password, or personally identifiable information.
Although cryptocurrencies and their supporting ecosystems are perceived to be a safe and secure medium, owing to the built-in cryptography, they are not immune to security gap issues. As blockchain-based transactions go mainstream, they have been subject to theft, fraud, and other financial crimes. A report by Chainanalysis revealed that crypto crime hit an all-time high of $14 billion worth of exploits in 2021, although the share of crypto-related crimes was significantly reduced to 0.15% of total transactions in 2021, as opposed to 0.62% in 2020.These statistics indicate that the number of legitimate transactions outweigh the malicious ones. However, the volume of crypto crime highlights the alarming need for these systems to be vigilant against adversaries.
Some of the most widely-used forms of crypto cyberattack include:
Also known as malicious crypto mining, cryptojacking is a cybercrime in which attackers gain unauthorized access to the victim's device to mine cryptocurrency, thereby evading overhead expenses and other excessive costs incurred during the process. Cryptocurrency mining demands a lot of electricity—according to the Cambridge Center for Alternative Finance, bitcoin mining consumes around 110 terawatt hours per year, which amounts to 0.55% of global electricity production—and the increasing population of miners is accompanied by an increase in the complexity of hashes that require even more electricity and machinery to solve.
Cryptojacking is carried out via cryptocurrency mining malware, which can stealthily harness the processing power of the target device to perform mining, or in some cases, steal crypto resources from the target. Cryptojacking enables cybercriminals to reduce overhead expenses considerably, as mining is a cumbersome process; it requires a massive amount of electrical supply and hardware rigging dependent on heavy operational capacity, such as graphics processing units and application-specific integrated circuits.
One of the most commonly used mining malware is Coinhive, a readily available software that enables operators to embed a piece of JavaScript code on a website. The code enables operators to inconspicuously exploit a visitor's processing power to perform mining operations. Monero is the most common type of cryptocurrency that is mined using compromised personal computers.
Cryptojacking poses a serious threat to device security as it has a parasitic effect on the compromised systems, i.e., devices that are affected by cryptojacking tend to show reduced performance levels, overheating of systems, and can also be used as a vector to perform future cyberattacks.
A cyberattack that affects public ledgers (mostly that of Bitcoin), a Crypto 51 attack occurs when a group of miners turn rogue and wrest control of over 50% of the blockchain's mining hashrate or processing speed. Attacks of this kind tend to disrupt the decentralized working of crypto-based transactions. As a result, they can empower attackers to perform denial of service-style attacks.
Although such attacks are plausible, their outcomes tend to be less feasible, since attackers are challenged to keep pace with the rising number of blocks in the chain in order to consistently maintain 50% control over the hashrate. Additionally, executing this attack will cause an enormous rise in overhead and, once implemented, the concerned group of miners will be excluded from the reward system due to malpractice.
Crypto wallets hold the key to the peer's verification, the first step towards initiating a transaction. As they possess a major role in this mode of payment, crypto wallets can be prone to malware infestation and other sophisticated cyberattacks.
According to cybersecurity firm , a malware known as BHUNT uses illegally-downloaded content (such as torrents, and pirated software) in a device as vectors to infiltrate devices and target crypto wallets to steal the sensitive information they hold, such as public and private keys. Additionally, the malware is also capable of redirecting funds from the compromised wallet to another, besides stealing other sensitive information from the device. Another layer of sophistication that adds to the malware's unassuming quality is that it appears to be a digitally-signed software, making it hard for devices to detect.The malware is capable of attacking Exodus, Electrum, Atomic, Jaxx, Ethereum, Bitcoin, and Litecoin wallets. The majority of its victims hail from India, followed by the United States, Australia, Egypt, Germany, Indonesia, Japan, Malaysia, Norway, Singapore, South Africa, and Spain.
Refers to the presence of a third-party intruder who tends to hijack a P2P network (in this case, a transaction) to intercept, observe, and manipulate information passed in the communication channel without raising suspicion. MiTM attacks occur when data-in-transit (such as passphrases, and transaction addresses) are not safeguarded properly.
Some of the ways to protect cryptocurrencies include:
Cryptocurrency is a booming technology whose decentralized workflow and its potential to deliver high-yield returns have been the main source of attraction for legitimate users and threat actors alike. According to Triple-A, there are 300 million cryptocurrency users worldwide, as of 2021, with a market cap of $1 trillion. With an ever-expanding customer base, the need for blockchain-based platforms to scale up and safeguard the financial interests of users has never been so urgent.
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