How do hackers hack crypto?

CEX Hacks

Depending on the degree of decentralization of financial systems, crypto exchange hacks operate differently. Cryptocurrency hacks in DEXs are frequently the result of contract hacks and flash loan assaults. Price oracle manipulations or weak relationships between contracts are frequent occurrences for DeFi protocols. The main issues with centralized cryptocurrency exchanges are poor operational security, unclear access control, terrible integrity, and careless custodianship. Cryptocurrency hacks have decreased over time thanks to exchanges, but they still happen much more frequently than at conventional financial institutions.

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Centralized crypto exchanges.

Cross-Chain Bridge Hacks

The biggest cryptocurrency hacks involve bridges. The largest hacks in the majority of cross-chain bridges were blamed on stolen private keys, lax access control over who can sign transactions, and unaudited smart contracts. Most DeFi protocols have a backdoor at some level of the blockchain design, costing millions of dollars. Some errors can be traced back to uncomplicated errors regarding who can sign transactions.

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For whatever reason, a cross-chain bridge managing millions of dollars' worth of digital assets lacked both a process for granting and cancelling permits and a system for keeping track of payments. Social engineering and phishing are also quite important. A spear-phishing attempt also led to the compromising of the external validator node. Attackers frequently go after employees.

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Cross-chain bridges.

Crypto Wallet Hacks

There are two types of cryptocurrency hacks of digital wallets: hacks that affect users and hacks that affect the blockchain firms that power them. From the standpoint of the user, phishing schemes, keyloggers, and social engineering are the most typical attack vectors. Phishing scams, for instance, are sophisticated plans to deceive people into handing over control of their credentials. For instance, hackers may use bogus websites to exploit a publicized airdrop announcement and link with victims via malware wallets. There are countless simple and complex social engineering strategies, and it is largely up to the person to keep safe.

In a parallel universe, corporations that power cryptocurrency wallets are the target of hacking attempts that take advantage of flaws in blockchain technology. For instance, hackers stole $4.5 million from the 2022 Slope wallet for mobile devices by taking advantage of seed words that were communicated in unencrypted. Being susceptible to appropriate brute force, as in the instance of the Profanity vanity tool, is yet another example.

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Crypto wallet.

What shall we do for protection?

Cryptography may never completely stop hackers. However, blockchain projects need to take proactive security steps to guard against hackers accessing their operating cash and cryptographic keys.

Real decentralization for reaching agreement.

Review and revoke access frequently.

Ongoing surveillance and emergency reaction.

Both parties' smart contract audit.

100% of accounts involved in cross-chain contacts have been validated.

Lifecycle of Secure Development.

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Take care of your assets!