The majority of individuals delineate Bitcoin as a cryptocurrency or virtual currency that utilizes a decentralized network to connect users.
Presently, the globe has numerous cryptocurrencies in circulation, yet Bitcoin is the most commonly used and popular digital currency.
Political independence and preservation of anonymity are the principal benefits of this cryptocurrency. Nevertheless, they also result in Bitcoin becoming appealing to con artists and malicious hackers. Bitcoin holds a grey area in a few jurisdictions, which indicates that local law enforcement agencies do not grant Bitcoin theft prevention precedence. However, this does not discourage users from buying and using Bitcoin.
Nowadays, users utilize cryptocurrency exchanges to invest or trade Bitcoin. Such exchanges permit users to invest, buy, and sell Bitcoin. Preferably, users utilize cryptocurrency exchanges to trade Bitcoin by means of fiat money. Some users had lost money to hackers in the past few years when they successfully hacked cryptocurrency exchanges and transferred their Bitcoin.
Stealing Bitcoin requires additional knowledge and technical expertise than stealing fiat cash. In many instances, advanced malicious hacker attacks played a significant role in Bitcoin heists. Therefore, dishonest crypto exchange employees or proficient outsiders fulfill their roles in these attacks.
Here are five approaches that hackers use to steal Bitcoin:
1. Crypto Exchange Attacks
Thousands of Bitcoin users visit crypto exchanges annually. Users keep millions of their dollars on these exchanges. Thus, hackers target them more frequently. Hackers may proceed to steal Bitcoin from the wallets of cryptocurrency exchanges. Hackers may proceed to steal Bitcoin from the wallets of cryptocurrency exchanges and their customers. Several traders deposit Bitcoin in crypto exchanges for convenience. Past events indicate that hackers have targeted a crypto exchange and successfully stolen the money in customers’ accounts.
2. Exploiting Wallet Vulnerability
Security flaws may render a Bitcoin wallet vulnerable to theft via hacking attempts. In certain instances, service providers retain private keys inside virtual wallets for convenience. Significantly, hackers may exploit a wallet’s vulnerability to steal access and funds in a single attack.
3. Stealing Private Keys
A number of individuals retain private keys in digital repositories such as cloud storage and exchanges. This increases their risk of being hacked and stolen. After hackers have obtained the private keys, they may employ them to access and transfer Bitcoin holdings. Consequently, the legitimate owners of Bitcoin lose their funds to the hackers.
4. Dark Web Market Attacks
Like Bitcoin exchanges, the dark web market also has comparable vulnerabilities. As an example, the Mt. Gox was a significant Bitcoin heist that affected the dark marketplace named the Sheep Marketplace. This security breach resulted in losses of approximately $100 million, based on the exchange rates at that moment.
5. Fraudulent Investment Funds & Exchanges
A number of firms that pretend to do business in Bitcoin appear legit. Nonetheless, they are facades that criminals deploy to perpetrate financial crimes. Some of these firms assure oversized returns to entice investors. These are schemes that result in heavy losses for the investors. For example, the Ponzi scheme resulted in losses of up to $4.5 million for investors.
Security concerns surrounding Bitcoin are some of the most significant disadvantages of this cryptocurrency. Investors and traders ought to take into consideration these concerns prior to spending their money on this virtual currency.
The Bitcoin system has limitations and flaws that hackers may take advantage of. Hence, this describes incidents like the Mt. Gox security breach and Ponzi scheme that resulted in losses amounting to millions of U.S dollars.
Bitcoin exchanges are most susceptible to theft since hackers target them more frequently. Thus, it is essential to pick your cryptocurrency exchange cautiously before you begin trading this digital currency.