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One of the major or important factor we can never neglect in the aspect of cryptocurrency and blockchain technology is "security". The concept of cryptocurrency and blockchain security is extremely very important and this is why most top cryptocurrency exchanges are majorly concerned about the level of their wallet security than any thing else simply because the more secured the exchange is, the more safer the users funds. This is why today's content will be majorly focused on Security Risks on Cryptocurrency and Blockchain Technology.
Before delving into the security aspect of Cryptocurrency and blockchain technology, i think its best we make a brief review about what blockchain technology is all about for proper comprehension.
Blockchain Technology Brief Review
Most of us might have been hearing about the word Blockchain but the astonishing fact is that some of us don't know what this ubiquitous statement (blockchain) means. I'll be making a very brief description about blockchain technology and how it is related to cryptocurrency.
According to investopedia , blockchain is a distributed database that is shared among the nodes of a computer network and it can also act as a database which can be used to store information electronically in digital format. It helps to store information in blocks.
Blockchains can also be managed by peer to peer(p2p) network to be utilized as a publicly distributed ledger where nodes are able to generate new blocks via the effect of cryptography. This is why blockchain technology is the most secured and best way to develop and generate cryptocurrencies. This is one of the major reasons euromoney also stated that blockchain helps in recording information in such a way that makes it difficult or impossible to change, hack, or cheat the system.
There's really more to Cryptocurrency and blockchain technology, if I keep explaining some of the great features ascribed with blockchain technology, I'm quite sure it may take probably a whole day for you to read and digest such content. Also to avoid going off today's topic, it's best i stop here as regards to the brief review on Blockchain Technology.
Why is Security more Important in the world of Cryptocurrency and Blockchain ?
One of the major reasons most people do save money in banks is to ensure safety of their funds and to engage in financial transformation(s). The innovation of blockchain technology brought about the creation of digital currencies and there's no doubt that this great technology is taking over the world. In addition, it is also a great news to know that top cryptocurrency like Bitcoin and Etherium is now widely accepted as a means of payment across different businesses/companies or institutions across the world.
The adoption of cryptocurrencies is drastically increasing every year and this shows the futuristic prospects of cryptocurrency and blockchain technology. The more the adoption by masses, the more the need to strengthen the level of security.
The major importance of security in the world of cryptocurrency and blockchain technology is mostly to avoid the loss of funds (tokens/cryptos). There are some hackers who are majorly concerned about stealing your funds via cyber theft. I'll be sharing with you some of the ways the hackers can steal your funds below ;
Some Simple Ways to Loose Your Tokens
#1 BEING CARELESS WITH YOUR PRIVATE/ MNEMONIC KEYS/PHRASE
One of the most common methods users tend to loose their funds is by being careless with either their private keys or mnemonic phrases depending on the type of crypto wallet or exchange you are using.
A private key is mostly a string consisting of 64 hexadecimal characters. It contains both numbers and letters which can either be in uppercase, lowercase or sometimes in both forms. A good example of private key as explained by Safepal is afdfd9c3d2095ef696594f6cedcae59e72dcd697e2a7521b1578140422a4f890
A mnemonic phrase are set of random words which can either be 12, 18 or 24 in number. A good example of a typical mnemonic phrase is drug, bag, come, take, open, dog, barn, crank, plan, optimism, blink, cake. These set of words are known as mnemonic phrase and they can either be written down or backed up for storage purposes.
You must always ensure you backup the private Keys or mnemonic phrase generated to you by the crypto wallet you intend to use. This can be stored either online or offline but you must ensure it is well stored and safe to avoid other people having access to your funds.
The careless way which users tend to loose their funds is by exposing their private keys or mnemonic phrase to strangers. Some of the people you expose your private keys or mnemonic phrase to may also be an expert about the crypto wallet you are using which makes it easy for such users to have access into your crypto wallet causing you to loose your funds/assets.
In summary, never ever share your mnemonic phrase or private keys with anyone. Always ensure you store or keep them in a safe place where no one can have access to it except the people you trust (it's your wish)
#2 CLICKING ON PHISHING LINKS
One of the common ways which users loose their funds or assets is by clicking on phishing links. Phishing links may sometimes be extremely difficult for some users to detect and this is why more people keep loosing their funds through this method.
According to wikipedia, phishing link is a type of social engineering where the hacker sends a fraudulent or fake or deceptive message programmed to trick users into revealing sensitive information to the attacker/hacker or to deploy malicious software on the victim's infrastructure like ransomware.
There are several ways which the hacker(s) or attacker(s) go about this but the most common method they use is by introducing or luring users to ponzi schemes or fake advert that shows how users can win free tokens just by going through simple tasks (not airdrop). The hacker tends to place the phishing link in the context/article which sometime requires you to compulsorily click during the quest of earning this fake free tokens but it's quite unfortunate that you may loose all your tokens(funds) to the attackers or hackers during the process of earning fake free tokens.
Some hackers even go to the extent of requesting for your wallet login details such as your mnemonic phrase or private keys but it's really very sad we have users revealing their private keys or mnemonic phrase to these hackers or attackers which makes them loose their funds very easily.
In summary, avoid clicking on phishing links. It will also be best if you can avoid fake get rich quick crypto scheme because this is one of the common way attackers or hackers use to steal users funds or assets.
#3 DUST ATTACK
Another common method users loose their funds or assets to hackers is through Dusting Attack. Binance Academy defines dusting attack as quoted below ;
a dusting attack refers to a relatively new kind of malicious activity where hackers and scammers try and break the privacy of Bitcoin and cryptocurrency users by sending tiny amounts of coins to their wallets. The transactional activity of these wallets is then tracked down by the attackers, who perform a combined analysis of different addresses to deanonymize the person or company behind each wallet.
This connotes that you may find some strange coins or tokens in your wallet unexpectedly (not airdrop). These type of coins are mostly used for dust attacks. You can also check out some coins used for dust attacks via my previous post . The hackers can have access to your wallet whenever you authorize your wallet with the phishing link sent to claim the dust token sent into your wallet.
In summary, it is advised that you should be more cautious of your wallet and avoid being hasty to transact with such coins or exchange such coins as you this may make you loose your assets.
References
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