With the rising popularity of cryptocurrencies like Bitcoin, hackers have found new ways to steal digital assets from unsuspecting victims. Bitcoin and other cryptocurrencies offer anonymity and decentralization, making them attractive targets for cybercriminals. In this article, we will explore the most common methods hackers use to steal Bitcoin and other digital currencies.
Phishing
One of the most common techniques used by hackers is phishing. This involves creating fake websites or emails that impersonate legitimate cryptocurrency businesses to trick victims into revealing personal information like account credentials or private keys. For example, a phishing email might pretend to be from a popular cryptocurrency exchange and ask the victim to click a link to “reset your account password.” The link actually leads to a fake site controlled by the hackers. Once the victim enters their real password, the hackers can gain access and steal funds from the account.
Some red flags that may indicate a phishing attempt include:
- Suspicious or mismatched sender address
- Requests to click on a link and “confirm” or “validate” account details
- Threats of account suspension if action not taken
- Poor grammar or spelling errors
The best way to protect against phishing is to always double check the sender address of emails, hover over links to preview their real destination, use multifactor authentication on accounts, and never share private keys or account details unless you initiated the action and are certain of the recipient’s identity.
Keyloggers and Screen Capture Malware
Hackers may also install malware like keyloggers or screen capture programs to monitor what a victim types on their keyboard or sees on their screens. The goal is to obtain private wallet addresses, account credentials, and passwords that can then enable theft. This malware may be installed if a victim clicks on an infected link, opens an unsafe email attachment, or visits a compromised website. The malware can then record anything the victim types or sees, forwarding it back to the hackers to exploit.
Ways to avoid this threat include:
- Avoid opening attachments or clicking links from unknown or suspicious senders
- Install reputable antivirus software that scans for malware
- Be wary of public WiFi hotspots which can facilitate malware installation
- Use virtual wallets and encrypted email for sensitive information
Clipboard Hijacking
This method relies on intercepting information copied to a device’s clipboard. Many cryptocurrency users copy wallet addresses to and from exchanges or other destinations. Hackers can insert malware that monitors the clipboard content, replaces legitimate addresses with ones belonging to the hacker, and tricks the victim into sending funds to them instead of the intended recipient. This cryptojacking malware may also be acquired from visiting infected sites or installed apps.
Recommended precautions against clipboard hijacking include:
- Avoid copying and pasting wallet addresses, and instead type them directly
- Double check the pasted address before confirming each transaction
- Use a virtual keyboard to enter sensitive information
- Install a reputable antivirus to detect clipper malware
Fake Wallets
Fake cryptocurrency wallet apps infiltrate app stores and pretend to enable secure storage and usage. However, once victims download them, the wallet malware either sends login credentials back to hackers, or tricks users into transferring funds out of their legitimate wallets. The fakes apps, websites and profiles are designed to lure unsuspecting users who don’t double check the product source and legitimacy before trusting them with account or wallet access.
Avoid falling victim by:
- Only using reputable and well-known wallet apps that have open-source code and high ratings
- Verifying wallet developers and product listings before downloading or using them
- Not trusting recommendations on social media from untrusted accounts
- Enabling wallet encryption, multifactor authentication, and other security features when available
SMS Theft
If 2FA (two-factor authentication) is enabled for an account, the service will often send a confirmation code via SMS to approve actions like withdrawals or transfers. Hackers can hijack SMS 2FA by porting victim phone numbers to a SIM card they control. This allows them to intercept 2FA codes and complete account logins or transactions. Number porting requires gathering some basic personal details either through phishing campaigns, Malware, or social engineering.
Avoiding mobile number theft involves:
- Avoiding SMS 2FA and using other methods like an authenticator app
- Adding account locks and delays to unauthorized porting requests
- Being vigilant of any service notifications about new device logins or password resets
Public WiFi Network Threats
Free public WiFi networks in places like cafes, airports, or hotels are frequently compromised by hackers seeking to intercept data and credentials. When a victim connects to one of these networks, the hacker can employ tactics like man-in-the-middle (MITM) attacks to spy on traffic and insert themselves between the user and internet. Any unencrypted data can then be viewed and stolen, including passwords or private keys logged in plain text from cryptocurrency sites.
It’s best to avoid accessing any accounts or wallets via public WiFi. If necessary, use a trusted VPN, don’t access sensitive accounts, and avoid plain text password transmissions.
Cryptocurrency Giveaway Scams
Hackers commonly impersonate celebrities or notable figures in the cryptocurrency space and pretend to offer giveaways of digital assets if users first send a small amount to register. These crypto giveaway frauds rely on creating a false sense of urgency and excitement to trick victims into rationalizing unreasonable offers. The scammers simply collect deposits and disappear once their operation is exposed. These giveaway promises should be considered too good to be true without independent verification.
Avoid falling for fake crypto giveaways by:
- Not trusting celebrity endorsements unless officially announced
- Checking discussion forums to see if the offer is reported as a scam
- Being extremely skeptical of free money offers requiring upfront payment
Fake Exchange Websites
Scammers create sophisticated fake exchange websites that mirror the login process and interface of real platforms. After victims create an account and deposit funds, the hackers steal any deposited currency and shut the site down before getting caught. The website itself, support channels, and promotional materials are designed to build trust and appear legitimate.
Check for the following red flags when using an unfamiliar exchange:
- Website has no history or traceable online reputation
- Contact email is non-professional and on a public domain
- No evidence of legal registration or required licenses
- Suspicious domain name and appearance copying a real brand
Compromised Exchange Accounts
Cryptocurrency exchanges require strong passwords and two-factor authentication to ensure account security. However, hackers may still attempt to brute force entry through guessed passwords, phishing 2FA codes, using malware, or exploiting platform vulnerabilities. Compromised accounts allow them to directly access stored funds and information.
Minimize risks by:
- Enabling all available security features on the exchange
- Using a unique complex password for each exchange
- Storing minimal funds on platforms long term
- Monitoring account activity closely for unauthorized access
Fake Wallet Extensions
Browser wallet extensions like MetaMask allow easy access to Ethereum-based cryptocurrencies and decentralized applications. Hackers build fake wallet extensions that can detect activity, extract keys, and alter transactions when users install them. The extensions impersonate legitimate services with a near-identical interface design. This tricks victims into providing the malicious extension open access rather than the real service.
Stay safe from fake extensions by:
- Only installing from official stores like the Chrome Web Store
- Checking number of users, ratings, and recent reviews
- Comparing branding, design, and domain registered
- Enabling transaction signing prompts before blindly approving
Insecure Private Key Storage
Cryptocurrency private keys are essentially the passwords that allow access and control of wallet contents. Hackers using malware, phishing, or other methods can compromise improperly secured private key files and information. This allows them to import the credentials into their own wallets and authorize asset transfers. Any stored private keys should be strongly encrypted and secured, never shared, and protected behind passwords.
Tips to properly store private keys include:
- Avoiding online storage of unencrypted keys
- Using a hardware wallet device to generate and store keys
- Encrypting and password protecting all digital key copies
- Storing physical key copies securely in multiple geographically separate locations
Conclusion
As cryptocurrency usage increases, hackers employ more deceptive and invasive techniques to steal assets from unsuspecting victims. However, the methods highlighted in this article can largely be avoided by following security best practices. Paying attention to warning signs, verifying legitimacy, securing devices and accounts, controlling access, and never blindly trusting promotional offers can help protect your digital assets.
