Cryptocurrency is no longer as hot as it used to be at the height of surging bitcoin prices. However, the risks and threats associated with it remain. They even occasionally intensify as cybercriminals discover new vulnerabilities to exploit. Crypto users need to remain vigilant as new forms of attacks emerge.
According to a report by SonicWall, cryptojacking and ransomware attacks have dropped in the latter half of 2019. Researchers attribute the drastic drop in the number of cryptojacking incidents to the closing down of Coinhive. This has led crypto hackers to turn to more targeted attack vectors. Hackers make up for the declining viability of cryptojacking with an increase in specialized malware attacks to steal digital currencies.
In 2020, the cryptocurrency risk and threat landscape is likely to be similar to the previous years. It will continue to be dominated by data breaches, ransomware, malicious mining, disruptive regulation, and the continued use of unsafe havens.
- Data Breaches
In early March, the Trident Crypto Fund data breach exposed more than a quarter-million passwords along with email addresses, mobile phone numbers, as well as IP addresses. The passwords stolen were encrypted, but the hackers succeeded to decrypt and publish them online. This incident demonstrates one of the key vulnerabilities of Bitcoin and other cryptocurrencies. Cryptography-secured and blockchain-powered currency may be highly secure, but the intermediaries are not. Thus, stealing these digital assets remains possible.
Crypto exchanges, online payment systems, and other financial service companies that offer cryptocurrency-related services need to employ topnotch data breach security solutions to address threats aimed at digital currencies. They are the top targets of cyber thieves who target digital assets and malicious players who seek to discredit cryptocurrencies.
- Crypto Mining Threats
Cryptojacking may be slowing down with the introduction of effective measures to deal with the problem, but it is still one of the biggest threats to cryptocurrency in 2020. The use of malware to steal computing resources from unsuspecting computer users is unlikely to disappear completely, especially when cryptocurrency prices are rising.
Just recently, security researchers discovered a botnet referred to as “Vollgar,” which is believed to have been infecting up to 3,000 Microsoft SQL database servers daily since 2018. This crypto mining malware mines the digital currency “vollar” as well as monero. It infects servers with weak security systems through brute force attacks.
Crypto mining does not steal coins or information from infected devices or servers. However, they significantly affect the performance of the computers that turn into unwilling miners for the benefit of the perpetrator.
- Ransomware and Extortion
The previous year may have seen a reduction in the volume of ransomware attacks, but this does not indicate the reduced lucrativeness of this attack vector. The cyber threat has evolved into something more sophisticated and disruptive, instead of focusing on mass attacks. Recent ransomware statistics suggest the rise of the so-called “big game hunting.” Attackers are ditching low-return high-volume campaigns to concentrate on high-return attacks directed at businesses and organizations.
Companies are compelled to pay the ransom under the threat of interruptions in their operations, which can mean serious losses and damage to reputation. Also, the news of a cyber attack incident can be detrimental to the security perception of customers–not to mention potential penalties for any breach-of-privacy or data loss.
Bitcoin and other digital currencies are the ransom of choice for most ransomware attackers, mainly because crypto assets allow the anonymous ownership and use of funds. This anonymity is the reason why dark markets use cryptocurrencies alongside peer-to-peer tumblers or mixers. The movement of funds may be traced in the blockchain, but it will be very difficult to identify the recipient of the ransom.
- Unfriendly Regulation
Another significant cryptocurrency risk factor in 2020 is the possibility of unfriendly regulation. Many governments are already studying the regulation of bitcoin and other crypto assets. While many countries are already showing openness to crypto asset use, others still have vague and restrictive policies. Banks are trying to incorporate crypto assets into the mainstream financial system, but the attempts are mostly centered on controlling the digital currencies and reining over their democratized nature.
In China, bitcoin-related activities abound. The country hosts a massive share of the world’s network hashrate. It is also home to many of the world’s biggest cryptocurrency companies. Additionally, it has a vibrant OTC trade sector, which accounts for huge demand on the bitcoin network. However, the Chinese government appears to have a love-hate relationship with cryptocurrency in general.
The government of China plans to release a state-operated cryptocurrency in 2020. This may sound like a boon to the idea of cryptocurrency, but proponents of decentralized currency argue that China’s state involvement is counterintuitive. It is set to affect Bitcoin negatively, especially in terms of prices and growth.
- Ownership Imbalance
In relation to the regulatory risks, it also bears pointing out how much of the world’s crypto assets are held by a few people or organizations–sometimes called “crypto whales” because of their large holdings. Their decisions can easily affect how these digital assets behave. While crypto advocates fervently promote the decentralization and democratization of currency, it’s difficult to ignore the fact that large crypto holders have a say on what happens with alternative currencies. They can even influence or dictate “crypto civil wars” that manifest as forks.
- Technological Challenges
The world has not yet seen the failure of the underlying technology of Bitcoin and other cryptocurrencies. Blockchain and related tech are highly complex (voracious energy consumers even), so there’s a fear that this technological complexity can create complicated issues. Complex systems fail in complex ways, so the modern truism/saying goes. Nobody can be certain as to when the complex technological problem would rear its ugly head. It might be in 2020, coinciding with the COVID-19 pandemic and economic turmoil worldwide.
The risks and threats surrounding cryptocurrency are unlikely to lessen, let alone disappear. It’s incumbent on crypto owners to be aware of the challenges, problems, and issues they may encounter as they use these digital assets or hold them as a store of value. Security risks and other micro-level threats are not the only concerns to worry about. It’s also important to look at the macro level, particularly when it comes to government regulation, influence of “whales”, and technological risks.