Between 2011 and 2020, over $15.6 billion was stolen in crypto exchange hacks, affecting over 50 platforms, according to a Crystal Blockchain and Cointelegraph study. The principal targets were cryptocurrency exchanges, vulnerable to 27% of these cyberattacks.
In the context, according to article in Forbes outlined, the leading causes of these breaches were weak security practices, particularly around hot wallets. Additionally, some users fell prey to exit scams run by the platform operators themselves.
How hackers attack exchanges
Traders Union notes cybercriminals constantly seek vulnerabilities in crypto exchanges to facilitate unauthorized access. There are 5 main methods applied.
Cross-site scripting attacks
Traders Union highlights that most online trading platforms are vulnerable to Cross-Site Scripting (XSS) attacks. Such attacks involve injecting malicious code into websites, redirecting traders to harmful third-party sites, or infecting devices with malware, often aiming to steal passwords or manipulate clipboard content.
Misconfiguration
Traders Union points out that web terminals often lack critical HTTP headers, which bolsters defense against hacker attacks. These include the Content-Security-Policy, guarding against content injection like XSS, the X-Frame-Options combating clickjacking; and Strict-Transport-Security, which enforces secure HTTPS connections.
Exchange code vulnerabilities
Coverity Scan suggests that roughly 0.3 errors per 1000 lines of code pose a security risk. Traders Union underscores that while exchanges may maintain error-free code, vulnerabilities in third-party software, such as payment gateways or operating systems, can be exploited for phishing or malware attacks.
Smart contract vulnerabilities
Traders Union emphasizes that hackers may exploit flaws in a wallet’s smart contract code, seizing control over funds. Such exploits could target an individual wallet or execute mass attacks if multiple wallets share the same vulnerability.
Social engineering
As Traders Union warns, fraudsters posing as exchange officials may use spear phishing to infiltrate employee computers, often aiming to acquire private keys over months of effort. Fake mobile apps can further facilitate hacking individual user accounts.
Security measures implemented by crypto exchanges
TU analysts emphasize that cryptocurrency platforms adopt multiple security measures to counteract hacking attempts. Here are some critical practices:
- Multi-factor Authentication: The most common security method, requiring users to enter a one-time password typically sent via email or phone to authorize each transaction. Advanced multi-factor authentication may use specialized applications like Google Authenticator.
- Multi-signature: Bitcoin wallets require multiple keys held by different individuals for access. This method is only effective if all signatories are independent of each other.
- Cold Wallet Storage: Distributing funds between hot and cold wallets enhances security. With physical security measures and potentially multi-signature systems, cold wallets should hold most funds. Crypto keys are brought online only for transactions.
- Bitcoin Timelocks: These protocol features secure coins using a two-stage security mechanism with two distinct keys, adding a waiting period for complete control.
- Integrated Security Approach: Ensuring the security of the exchange’s code and third-party libraries, considering human factors, and securing the development environment are all important steps to maintain a secure cryptocurrency exchange.
Best crypto exchanges in 2023
Traders Union has curated a list of the top five cryptocurrency exchanges for 2023. Here are they:
- Bybit: A well-regarded platform specializing in cryptocurrency derivatives trading, particularly futures and perpetual contracts.
- OKEx: A distinguished digital asset exchange providing various trading services, including spot, futures, and options trading.
- Binance: A globally recognized cryptocurrency exchange offering spot, futures, and token trading services.
- Huobi Global: A central digital asset trading platform providing various services, including cryptocurrency, futures, options, and Forex trading.
- KuCoin: A comprehensive cryptocurrency exchange offering cryptocurrency trading, futures contracts, and Forex trading services.
In the 2023 FTX review, the exchange shines as a significant figure in the digital currency domain. Noted for its variety of trading services and user-friendly interface, FTX combines innovation and robust security, making it an attractive platform for all levels of traders.
Conclusion
In conclusion, cryptocurrency trading continues evolving, presenting opportunities and challenges. Staying updated with current trends, security measures, and top-performing platforms is crucial for successful trading. For more in-depth analysis, reviews, and up-to-date information, visit the Traders Union website.
Disclaimer: This is a paid release. The statements, views and opinions expressed in this column are solely those of the content provider and do not necessarily represent those of NewsBTC. NewsBTC does not guarantee the accuracy or timeliness of information available in such content. Do your research and invest at your own risk.
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