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As the value and visibility of cryptocurrencies continue to rise, the industry is gradually being exposed to increasingly sophisticated security issues. While institutional players typically have the resources and expertise to fortify their assets under multiple layers of defense, retail investors must take it upon themselves to learn about different types of attacks and determine how to mitigate these risks. To that end, we’ve compiled some of the most common yet devastating security risks below:
Even if a digital platform is generally well-constructed, the way it is tethered to the internet can still be exploited. Web hosts which expose network services to the Internet are relentlessly attacked, and multiple studies indicate that a publicly exposed host is typically discovered and attacked within minutes of being placed on the network. From there, malicious actors would be able to directly attack the exposed host and re-appropriate it for their ends.
Front-running within the cryptocurrency space is particularly egregious, as there have been multiple cases where attackers use their funds to open a low position for a particular cryptocurrency while using funds stolen from a large exchange account to artificially inflate the currency price, pulling the compromised user up to the high position. As a result, the attacker’s positions are sold first, and the stolen user’s funds are then transferred to out of their account through the secondary market for a quick profit. These attacks were commonplace during the ICO craze due to the overwhelming public interest in the potential windfall ICOs insinuated, with little attention paid to the dangers imposed by such attacks. Furthermore, few cryptocurrency exchanges are willing to proactively announce these attacks due to the reputational damage it could incur.
In these cases, anonymous groups were able to identify key individuals with access credentials to multiple databases or servers, then implement a coordinated, high-precision phishing attack to acquire those credentials. As a result, the damage resulting from phishing attacks oftentimes extends beyond the initial victim, reverberating negatively throughout an entire system.
Even without a full user password, more tech-savvy attackers are also able to exploit hash function collisions to bypass protocols such as MD5 and SHA-1, which are widely used to build authentication and integrity mechanisms in cryptographic protocols.
To date, network hijacking malware has been found in everything from government servers in North America to an operational technology network controlling water utilities across Europe. While within the context of crypto, these attacks have only involved relatively benign crypto-mining malware, coupled with more disruptive cyberterrorism tactics which are capable of shutting down large-scale national targets. The effects of a temporary network hijacking could severely compromise the entire internet architecture upon which the bourgeoning crypto ecosystem relies on.
As crypto assets take up an increasingly large portion of many investors’ portfolio, there is also an increasing need to understand the underlying principles of the blockchain and appreciate the importance of private keys. Every crypto investor needs to take digital asset protection very seriously, and at Cobo, our central motivation is to support secure and streamlined blockchain development and make it easier to own and utilize the crypto tokens of your choice. To this end, Cobo Wallet’s Hardware Security Module technology ensures that the vast majority of our user assets are stored in a fully offline, globally distributed system, and are further protected by multiple software layer protocols and a multi-signature mechanism which prevents funds from getting lost due to a single point of failure.
Cybercrime will continue to evolve in tandem with the cryptocurrency sector and industry digitization, and many online exchanges and even hardware custodial solutions are not equipped to repel the full spectrum of approaches and tools malicious actors can implement. As you take steps to safeguard your digital assets, it is imperative that you thoroughly research your crypto custodianship options, avoid making purchases from third-party distributors, and ensure that your wallet’s security mechanisms are pressure-tested against the worst possible scenarios.
Introduction to hash functions Hash functions are one of the most extensively-used cryptographic algorithms in blockchain technology. They are cryptographic (but not encryption) algorithms that are designed to protect data integrity. In a nutshell, a hash algorithm is a mathematical function that transforms any input into a fixed size output. This cryptographic hash function is based on ChaCha stream cipher; designed by Daniel J. Bernstein. Blake2b is one of the algorithm based on Blake2 and the other one is Blake2s. The difference between them is Blake2b is optimized for 64-bit platforms whereas Blake2s is suitable for 8 to 32-bit platforms. Blake2 is faster and more secure than MD5, SHA-1, 2 and SHA-3 hash algorithms. To learn ... Introduction to hash functionsHash functions are one of the most extensively-used cryptographic algorithms in blockchain technology. They are cryptographic (but not encryption) algorithms that are designed to protect data integrity.In a nutshell, a hash algorithm is a mathematical function that transforms any input into a fixed size output. To be cryptographically secure — and usable... Cryptographic hash functions with these three properties are often in cryptocurrencies to pass transaction information as anonymously as possible. Take bitcoin, the original and largest cryptocurrency. It uses the SHA-256 cryptographic hash function in its algorithm. This gives Bitcoin a level of encryption that could only be broken by highly ... Anyone who spent more than a couple of minutes conversing about Bitcoin and cryptocurrencies in general has probably been introduced to the term “cryptographic hash function”. In the same breath, that person’s conversation partner might have mentioned some even stranger sounding words like DSA, MD5, SHA-1, SHA 256, RIPEMD, BLAKE and various other “cryptographic hash […] A generic cryptographic hash function has two inputs: the message it’s going to compress or hash ( x) ... if you go ahead & try providing the MD5 hash function “Hello World!” yourself you should see the exact same resulting hash. Awesome. Now let’s move forward to setting the notation for a collision; in addition to previous variables H, s, x, & x* we now introduce a second message (x ... MD5 and SHA-1 are some of the common cryptographic hash functions used for the purpose of data validation. Even though a lot of the times cryptographic functions are called as ‘hash functions’, yet this term is incorrect to use as a hash function is a generic term that is used to include many algorithms such a cyclic redundancy checks along with cryptographic hash functions. If you’ve spent even a little bit of time learning about Bitcoin and other cryptocurrencies, you’ve no doubt heard the term “cryptographic hash function.” You may have heard of various “cryptographic hash algorithms” like DSA, SHA-1, SHA 256, MD5, BLAKE, and RIPEMD. In case those terms flew over your head, just know that cryptographic hash functions relate to MD5 – An MD5 hash function encodes a string of information and encodes it into a 128-bit fingerprint. MD5 is often used as a checksum to verify data integrity. However, due to its age, MD5 is also known to suffer from extensive hash collision vulnerabilities, but it’s still one of the most widely used algorithms in the world. Hash and hashing algorithms are key concepts that blockchain novices are familiar with and that always go hand in hand with security. To maintain decentralized networks and consensus mechanisms, including Bitcoin or Ethereum with a thousand nodes connected via p2p, a “lack of trust” and an effective confirmation system are necessary. These networks need compact […]
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