More than $15.6 billion was stolen in crypto exchange hacks between 2011 and 2020, with more than 50 platforms affected, according to a study by Crystal Blockchain and Cointelegraph. The main targets were cryptocurrency exchanges, vulnerable to 27% of these cyberattacks.
In context, according to the outlined article in Forbes, the main causes of these breaches were weak security practices, particularly around hot wallets. In addition, some users fell prey to exit scams carried out by the platform operators themselves.
How hackers attack exchanges
Traders Union notes that cybercriminals are constantly looking for vulnerabilities in crypto exchanges to facilitate unauthorized access. 5 main methods are applied.
Cross-site scripting attacks
Traders Union emphasizes that most online trading platforms are vulnerable to Cross-Site Scripting (XSS) attacks. Such attacks include injecting malicious code into websites, redirecting merchants to malicious third-party sites, or infecting devices with malware, often aimed at stealing passwords or manipulating clipboard content.
Traders Union points out that web terminals often miss critical HTTP headers, strengthening defenses against hacker attacks. These include the Content-Security-Policy, which protects against content injection such as XSS, the X-Frame-Options which prevent clickjacking; and Strict-Transport-Security, which enforces secure HTTPS connections.
Exchange code vulnerabilities
Coverity Scan suggests that about 0.3 errors per 1000 lines of code are a security risk. Traders Union underlines that while exchanges can maintain flawless 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 can exploit flaws in a wallet’s smart contract code to take control of funds. Such exploits can target an individual wallet or launch massive attacks if multiple wallets share the same vulnerability.
As Traders Union warns, fraudsters posing as exchange agents can use spear phishing to infiltrate employees’ computers, often with the goal of obtaining private keys after months of effort. Fake mobile apps can further facilitate hacking of individual user accounts.
Security measures implemented by crypto exchanges
TU analysts emphasize that cryptocurrency platforms take multiple security measures to prevent hacking attempts. Here are some critical practices:
- Multi-factor authentication: The most common security method, requiring users to enter a one-time password that is usually sent via email or phone to authorize each transaction. Advanced multi-factor authentication can use specialized applications such as Google Authenticator.
- Multiple signatures: Bitcoin wallets require multiple keys from different people to access. This method is only effective if all signers are independent of each other.
- Cold Wallet storage: Dividing money between hot and cold wallets improves security. With physical security measures and possibly multi-signature systems, cold wallets should hold the most funds. Crypto keys are only brought online for transactions.
- Bitcoin time slots: This protocol provides secure coins using a two-stage security mechanism with two different keys, adding a wait for full verification.
- Integrated security approach: Ensuring the code security of the exchange and third-party libraries, taking into account human factors, and securing the development environment are all important steps in maintaining a secure cryptocurrency exchange.
Best Crypto Exchanges in 2023
Traders Union has compiled a list of the top five cryptocurrency exchanges for 2023. Here they are:
- Byte: A reputable platform that specializes in trading cryptocurrency derivatives, especially futures and perpetual contracts.
- OKEx: A reputable digital asset exchange that offers various trading services including spot, futures and options trading.
- Binance: A globally recognized cryptocurrency exchange that offers spot, futures and token trading services.
- Hubi Global: A central digital asset trading platform that offers various services including cryptocurrency, futures, options, and forex trading.
- KuCoin: A comprehensive cryptocurrency exchange that offers cryptocurrency trading, futures contracts and Forex trading services.
In the 2023 FTX review, the exchange shines as a major figure in the digital currency realm. Known for its variety of trading services and user-friendly interface, FTX combines innovation and robust security, making it an attractive platform for traders of all skill levels.
In conclusion, cryptocurrency trading continues to evolve, bringing opportunities and challenges. Keeping up to date with current trends, security measures and top performing platforms is crucial to successful trading. Visit the Traders Union website for more in-depth analysis, reviews and current information.
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