Increasing security threats must be considered as cryptocurrency continues evolving with rapid innovation. Hacker attacks pose a severe threat to cryptocurrency users. This article will explore several major mainstream hacker attacks, how they work, and how to protect oneself from them.
Recent Cases and Losses
In 2023, 21 users of Safe Wallet suffered losses totaling $5 million due to such attacks. These cases highlight the severe consequences that address poisoning can cause. The Create2 function in Solidity plays a crucial role in these attacks. According to the security company Slowmist, another group of hackers exploited the Create2 function to steal $3 million from 11 victims.
Popular Hacker Attacks
Address Poisoning
Address poisoning is a method of attack that deceives users by mimicking cryptocurrency wallet addresses. The basic principle of this attack is for hackers to analyze transactions of the target wallet and create addresses similar to the addresses to which the wallet typically sends funds. They then send small amounts of funds to these addresses. Victims may mistakenly believe these addresses are familiar and make large transfers to them.
Theft
Attackers may use phishing, transaction interception, or address manipulation to deceive users into transferring funds to malicious addresses.
Disruption
Address poisoning can disrupt the regular operation of blockchain networks by introducing congestion, delays, or interruptions in transactions and smart contracts, thereby reducing the network’s effectiveness.
Impersonation
Attackers often attempt to impersonate well-known figures to mislead cryptocurrency users. This undermines trust in the network and may lead to erroneous transactions or confusion among users.
Phishing
Wallet drainers are malicious cryptocurrency-related software that has seen significant “success” in the past year. These software are deployed on phishing websites, tricking users into signing malicious transactions and stealing assets from their cryptocurrency wallets. These phishing activities continue to target ordinary users in various forms, resulting in significant economic losses for many who unwittingly sign malicious transactions.
Smart Contracts
Utilizing smart contracts, for instance, to split expenses requires two transactions. This may not be fast enough, leaving victims with the possibility of revoked authorization before the second transfer. To increase efficiency, they use multi-call for more efficient asset transfers.
Create Function
They also attempt to use the create2 or create a function to generate temporary addresses to dynamically bypass some wallet security checks. This renders wallet blocklists ineffective and brings more trouble to phishing researchers, as the destination of asset transfer is unknown before you sign, and temporary addresses lack analytical significance.
Sybil Attack
In blockchain networks, users’ cost of creating new identities or nodes is meager, so attackers heavily exploit this feature to launch Sybil attacks. By forging their identities and joining blockchain networks, attackers can control several nodes and their identities, enabling them to engage in malicious behavior, such as misleading the routing tables of regular nodes, thereby reducing the search efficiency of blockchain network nodes. Sybil attacks mainly affect blockchain networks in the following aspects:
False Node Joining
Following the protocols of blockchain networks, any network node can send node joining request messages to blockchain networks. Through this process, Sybil attackers can gather extensive information about blockchain network nodes, enabling them to analyze the topology of the blockchain network.
Misleading Blockchain Node Routing Selection
The dynamic exchange of routing information among nodes plays a vital role in maintaining the continuous functionality of blockchain networks. Nodes need to periodically announce their online status to neighboring nodes to ensure their inclusion in routing tables. Malicious Sybil intruders can invade the routing tables of normal blockchain nodes through this process and mislead their routing selection, reducing the routing update and node search efficiency of blockchain nodes.
False Resource Publication
Once Sybil attackers invade the routing tables of blockchain network nodes, they can freely publish their false resources.
Malicious Nodes
Malicious nodes can freely join or leave blockchain networks through attacks by pretending to be attackers. They can use the limitations of blockchain nodes to launch attacks or disrupt the integrity of networks. Once attackers enter blockchain networks and attempt to disrupt them, this situation will occur, as they will engage in destructive activities by sending false transaction requests to the network or trying to revoke valid transactions.
How do we avoid them?
From the perspective of individual users, protecting private keys is extremely important. Do not store blockchain keys as text files on related terminal devices. Private keys should not appear in plaintext on stealable servers or third-party platforms. Backups should be made to facilitate retrieval in case of private critical loss. For large enterprises or financial custodians, it is even more essential to seek flexible and secure data encryption technologies and strengthen password management.
MPC technology addresses this challenge very well. HyperBC provides an MPC solution in which private keys are encrypted, and distributed among multiple parties. These parties independently compute a portion of their held private key to generate signatures without revealing to other parties. Since the entire private key never appears at any given time, MPC provides an additional layer of protection for private keys.
Shortly, HyperBC will offer more flexible custody methods by combining hot wallets, cold wallets, and MPC to introduce various combinations of self-custody wallets. It will offer the most secure and comprehensive asset management solutions for multiple types of enterprises.
Protecting one’s wealth and data security is crucial. We can effectively address potential risks by thoroughly understanding the workings of hacker attacks and taking corresponding preventive measures. We have many tools and methods to fortify our security defenses, from protecting private keys to adopting advanced multiparty computation technology. Let’s work together to create a secure and reliable environment for our digital assets, making it difficult for hackers to exploit vulnerabilities.
About HyperBC
HyperBC stands as a market leader in digital asset custody and payment solutions. Catering to businesses seeking a secure and efficient transition to Web3 transformation, ensuring the security of assets and We are committed to the mission of “ fostering financial freedom.” In line with this objective, we provide asset owners with a complete range of services, encompassing asset custody, merchant payments, clearing and other financial services.
