With how quickly the cryptocurrency space moves, getting accurate information first is key. It challenges you to think beyond the latest DeFi craze or primary NFT collections. It’s protecting your digital assets from more sophisticated threats every day. GreedyChain.com pinpoints the biggest security blunders that can put your crypto at risk. Our industry-leading analysis helps you make informed decisions that protect your bottom line. In just 2024 so far, victims have lost almost $1.5 billion to security exploits and fraud. Time to wake up to security!
Over-Reliance on Two-Factor Authentication (2FA)
Understanding the Limitations of 2FA
Two-factor authentication, or 2FA, a common security measure, requires two steps to verify your identity. In order to sign into your account, you’ll need to pass two forms of verification. Though 2FA is an excellent additional layer, it can’t protect against every threat. Many users mistakenly believe that 2FA alone is enough to protect their accounts, leaving them vulnerable to more sophisticated attacks.
A new blockchain security measure study finds that hasty 57.1% of users rely entirely on two-factor authentication (2FA) to safeguard themselves from rug pulls. Moreover, 49.3% use 2FA to protect against smart contract exploits. This over-reliance on 2FA can be a fatal flaw, which is understandable since 2FA does not safeguard against every type of attack. 2FA isn’t going to save you when you enter into a bad smart contract. The above won’t protect you from a front-end attack on a DeFi platform. In fact, the recent $1.5 billion crypto heist may have resulted from one front-end attack. This unfortunate incident makes it even more clear that additional, holistic security efforts are severely needed.
Actionable Steps to Enhance Security Beyond 2FA
If you really want to protect your crypto, you have to look past 2FA. Consider these additional measures:
- Hardware Wallets: Store your private keys offline on a hardware wallet to protect them from online threats.
- Unique Passwords: Use strong, unique passwords for each of your crypto accounts.
- Biometric Authentication: Enable biometric authentication where available for an added layer of security.
- Regular Security Audits: Conduct regular security audits of your systems and accounts to identify and address potential vulnerabilities.
Neglecting Token Approval Checks
The Risk of Unrevoked Token Approvals
One of the simplest but most ignored security practices in the crypto world is checking and revoking token approvals. With most decentralized application (DApp) interactions, you are giving the DApp permission to spend your tokens. At some point in time, you’ll likely forget about these approvals, which makes your tokens an easy target for malicious actors.
The statistics are alarming. Worryingly, the study found that only 10.8% and 16.3% of participants regularly checked and revoked token approvals to protect against rug pulls and smart contract exploits, respectively. That’s because an overwhelming percentage of crypto users are doing so without even realizing they’re exposing their funds to danger.
How to Check and Revoke Token Approvals
Smart contracts provide the foundation for many of these DeFi applications. When a smart contract has security flaws, those are often exposed to hackers ready to attack and steal money, resulting in catastrophic losses. Smart contract audits are critical for pinpointing these vulnerabilities and patching them up before hackers have a chance to take advantage.
- Use a Token Approval Checker: Several tools are available to check your token approvals on various blockchains, such as Etherscan, BSCScan, and Polygonscan.
- Identify Unnecessary Approvals: Review the list of approvals and identify any DApps you no longer use or trust.
- Revoke Approvals: Use the token approval checker to revoke the approvals you no longer need. This will prevent those DApps from spending your tokens.
- Regularly Monitor Approvals: Make it a habit to regularly check and revoke token approvals to minimize your risk.
Ignoring Smart Contract Audits
Understanding the Importance of Smart Contract Audits
Even if you’re not a smart contract aficionado, you can get more value from the audit by learning to pay attention to audits. Audit records Before interacting on a DeFi platform, check to see if its smart contracts have been audited by well-known auditing firms. Audits are a third-party review of the contract’s security, arming you with increased assurance of its safety.
Why You Should Pay Attention to Audits
Phishing scams are one of the biggest dangers in the crypto space. Scammers use fraudulent emails, websites and social media to trick consumers. Their objective is to defraud users into providing their private key or sending them money directly. These scams can be very sophisticated, so anyone can be a victim if you’re not vigilant.
How to Assess the Credibility of an Audit Report
- Check the Auditor's Reputation: Research the auditing firm to ensure they have a strong track record and are respected in the crypto community.
- Review the Audit Scope: Understand what aspects of the smart contract were audited and what limitations the audit may have had.
- Look for Remediation: Check if the audit report includes details of any vulnerabilities found and whether they have been addressed by the development team.
Falling for Phishing Scams
The Prevalence of Phishing in Crypto
Whether you lost a couple hundred or a million dollars in a crypto investment scam, it is an incredibly painful experience. You have to start learning from those mistakes and take it as an opportunity to get better at security. When measuring the participant’s immediate emotional reactions to cooking, they found quite the opposite. Over half of the victims claimed that their faith in DeFi was equal to or even increased following the attack. Yet as awesome as this resilience is, we need to focus that awesome resilience towards some awesome security.
Recognizing and Avoiding Phishing Attacks
- Verify Website URLs: Always double-check the URL of any website you visit, especially if it involves entering your private keys or connecting your wallet.
- Be Wary of Unsolicited Emails: Be cautious of emails from unknown senders or those that ask you to click on links or download attachments.
- Never Share Your Private Keys: No legitimate service will ever ask you for your private keys. Keep them safe and never share them with anyone.
- Enable Anti-Phishing Measures: Use browser extensions and security tools that can help detect and block phishing attempts.
Failing to Learn from Mistakes
The Psychological Impact of Crypto Scams
Perhaps most concerning is that 26% of those who were scammed didn’t do anything after falling victim to a scam. Even more concerning, 16.4% opted to double down by investing more in competing DeFi services! Moreover, only 17.6% of respondents who indicated they have been the victim of a DeFi scam in the past consistently monitored their token approvals thereafter. This points to a larger and more important issue of education and informing people on why it’s important to learn from failures.
Taking Action After a Scam
Stepping into the crypto space will take equal parts passion and precaution. Learn the top 6 security mistakes we all make. By being vigilant and following these steps, you’ll be much less likely to become a victim of a scam or exploit. Keep in mind, 2FA is a solid first step, but it’s not the end goal. Make it a habit to review and revoke token approvals. Understand smart contract audits, be on the lookout for phishing scams, and try, try, and always try again.
Steps to Take After a Crypto Scam
- Report the Scam: Report the scam to relevant authorities and security platforms to help prevent others from falling victim.
- Analyze What Went Wrong: Take time to understand how the scam occurred and what vulnerabilities you may have had.
- Implement New Security Measures: Based on your analysis, implement new security measures to protect yourself from similar attacks in the future.
- Educate Yourself: Stay informed about the latest crypto scams and security best practices.
- Share Your Experience: Share your experience with others to help raise awareness and prevent them from making the same mistakes.
Conclusion: Enhancing Your Crypto Security Posture
Summary of Key Insights
As the crypto world continues to develop, so will the threats. Learn and evolve your cybersecurity measures accordingly. The world will have the benefit of your expertise, making the crypto space safer and more secure for everyone. By adopting these principles, you’re well on your way to safely exploring the exhilarating new frontier of decentralized finance and keeping your investments as bright as your future.
Future Outlook for Cryptocurrency Security
As the crypto landscape evolves, so too will the threats. Staying informed, adapting your security practices, and sharing your knowledge with others are essential steps in creating a safer and more secure crypto ecosystem. By embracing these principles, you can confidently navigate the exciting world of decentralized finance and protect your hard-earned investments.
