Why Is The Crypto Industry So Vulnerable To Hackers and Scammers?

With the ever-increasing cryptocurrency popularity, there has also been an increase in crypto-related crimes.

Trading Platform UK data showed a tremendous increase in crypto hacks and thefts over a span of one year from 2019 to 2020. The value of thefts increased from $270.7 million to $513 million, which amounts to approximately a 38% increase in just one year. It was at its peak of $950 million in 2018.

However, blockchain fraud and embezzlement saw a decline in its value by almost 57.77% between 2019 and 2020. From $4.4 billion it came down to $1.3 billion.

The rise in the estimation of crypto theft continues even when the sector continues to establish. Even when exchanges, wallets, and other digital resources curators are making heavy investments into their security systems against theft and fraud. Most of these investors are also working in liaison with law enforcement agencies so that fraudulent activities can be detected almost immediately. Yet, crypto thefts and hacks are growing.

It can be gauged by the increased crypto crimes that hackers are adopting new hacking techniques to outperform the prevailing safety measures.

Using Decentralized Finance (DeFi) explosion to their advantage, many hackers fundamentally shifted their attention from exchanges and wallets. The sector pulled in revenue from more financial backers on the basis of the huge potential to reform the investment sector. What ultimately appealed to hackers was the fact that DeFi protocols lacked regulatory compliance, making it easy for anyone to access their code.

What is also attached to DeFi applications is their vulnerability to external exploits. The success of the projects is dependent on the inter-relationships of components, thus the projects and values they offer are directly related. Thus, the capacity to entice more investors is a gateway for hackers.

Many scammers have used the coronavirus situation to their advantage. Many scammers imitated legit companies and known people to gain information and crypto payment. Some of these scammers tricked people into believing that the money they were being asked for was to help the pandemic-impacted people.

A very recent scam was one in which notable personalities such as Elon Musk and various known organizations were involved. In order to promote a Bitcoin scam, the Twitter accounts of these distinguished people and companies were compromised. The Bitcoin scam allegedly advertised that it was meant to help society. The lack of documentation to track such scams, it gives hackers and scammers ample opportunity to misappropriate funds.

The regulatory authorities are taking measures to control crypto-related frauds. This justifies the decline 2020 saw in the value of blockchain fraud. The regulators have become overly alert and conscious of fraud including illegal activities like money laundering.

The cryptocurrency and blockchain are still in their trial stage, thus the vulnerabilities may exist for a while. However, as the industry matures, the gaps might be filled and the scammers and hackers will be blocked out.