Cryptocurrency hacks will increase by 2024, but smart contracts are not to blame
Cryptocurrency hackers and exploiters are poised for an even more successful year in 2024, potentially surpassing their performance in 2023.
In the first quarter of 2024, hackers stole $542.7 million worth of digital assets, a 42% increase compared to the same period in 2023.
The main reason for this is that hackers are constantly changing their attack vectors and looking for easier targets, according to Mriganka Pattnaik, co-founder and CEO of Merkle Science, a cryptocurrency risk and intelligence platform.
Pattnaik told Cointelegraph:
“While smart contract vulnerabilities remain a concern, hackers are increasingly targeting areas outside of smart contracts, such as private key leaks. “If such a breach occurs due to a phishing attack or insecure storage practices, significant losses are incurred.”
Phishing attacks involve hackers trying to steal sensitive information, such as cryptocurrency wallet private keys. Another type of phishing attack, known as address poisoning scams, aims to trick investors into willingly sending funds to fraudulent addresses that appear similar to addresses they have previously interacted with.
Last May, a trader lost $71 million worth of cryptocurrency in one of the most high-profile phishing attacks of the year. The attacker tricked the trader into sending 99% of his funds to the attacker’s address.
But in a bizarre turn of events, when the case caught the attention of a blockchain investigation firm and the attacker’s location was eventually revealed, the unknown thief returned $71 million to the victim over a week later.
Related: Memecoin traders lost over $1 million due to Normie exploit.
Smart contracts are becoming more secure, but hackers are finding easier targets.
Smart contract vulnerabilities have been one of the most common infrastructure attacks by hackers.
However, according to Merkle Science’s 2024 HackHub report, hacking funds lost due to smart contract vulnerabilities fell 92% from $2.6 billion in 2022 to $179 million in 2023.
According to Pattnaik, private key leaks are the biggest concern right now.
“While smart contract vulnerabilities remain a security issue, a significant portion of financial losses now result from attack vectors outside the smart contract realm. “The biggest security problem currently is the rapid increase in losses due to private key leaks,” he said.
By 2023, more than 55% of hacked digital assets were lost due to private key leaks.
The decline in smart contract exploitation is due to advanced security tools combined with hackers competing for easier targets, Pattnaik said.
“New security tools help identify and fix weaknesses in smart contracts before they can be exploited. “Finally, hackers may be looking for easier targets that require less technical knowledge to exploit, such as stealing private keys.”
Related: Tether CEO warns of new wave of cryptocurrency airdrop scam emails, CoinGecko potentially affected
As cryptocurrency valuations increase, more hackers are coming in.
Cryptocurrency prices have risen significantly since the beginning of the year. The total market capitalization of all cryptocurrencies has increased 54% year-to-date (YTD), according to CoinMarketCap data.
According to Pattnaik, in addition to increasing the potential bounties for exploiters, rising cryptocurrency prices are also attracting more hackers into the cryptocurrency space.
“Surges in the value of crypto assets make them tempting targets for hackers. “Because a successful exploit could result in the theft of significantly more funds than in previous years.”
According to a June 1 post from PeckShield, 30 separate cryptocurrency hacks resulted in the loss of $574 million worth of digital assets in May 2024, a 666% increase from the previous month.
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