It's surprising that we can pay so much attention to our physical security yet less attention to how we interact online. But for any developer—not just those interested in crypto—security is not something you can ignore. Actually, a study by iDenfy revealed that about $430 million in crypto was lost to 50 hacks in Q4 alone.
Most of this loss came from a data breach that affected the PlayDapp gaming platform. The research also highlighted that DeFi scams contributed greatly to this statistic, accounting for 60% of all crypto attacks. Well, of course, that was a slight decline from 2023's record but that doesn't mean that the risks have reduced. Therefore, in this article, we will highlight a few strategies to help you improve security despite the growing risks of attacks.
Important statistics
We can all agree that crypto advancements have, in one way or another, improved our life experiences. For instance, you can now make a BTC to INR conversion conveniently, whether on a laptop, phone or any other device. This is without mentioning the fast and cheap transaction speeds that we can now enjoy, all because of crypto. But with all these benefits, developers are met with the challenge of ensuring safe interactions since many threat actors eye the sector.
For instance, do you remember the serious $775 million worth of crypto heist that occurred in late 2022? The DeFi infrastructure was the most injured sector, losing about 82.1% of this amount. Experts claim that more than sixty percent of these attacks were from cross-chain bridges.
Two years later, just within the first quarter of 2024, about 739.7 million was stolen. All these statistics point to one thing: As long as you are interested in the crypto sector, paying attention to your infrastructure’s security is a must.
Let us explore a few of the vulnerabilities you may find.
Protocol layer vulnerabilities
Let's explore some protocol layer vulnerabilities.
1. Long-range attack
This one can have very detrimental effects, so you want to fix it as soon as possible. It happens when the attacker manages to interrupt and change the history of a chain. That makes the new chain longer and allows the attacker to include different transactions. To evade such an attack, wait until a sufficient number of blocks is confirmed before you can complete payment.
2. Race attack
Here, an attacker sends a transaction to a receiver while he sends the same amount to himself to nullify the payment. If you don’t confirm the transaction before finishing up the payment, you can actually fall victim to the attack. The trick is to wait long enough before you can append the digital signature.
3. Liveness denial
Liveness denial attacks are quite serious because they can lead to the temporal or even permanent closure of your network. So, validators will internally conspire to execute the attack by agreeing to stop producing blocks. To fix this, the community can fork the chain to allow new sets of reputable validators to produce blocks.
Network layer vulnerabilities
Among the security issues that could affect the network layer are:
1. Sybil attacks
Sybil attacks are critical because they can result in a malicious node operator taking over a blockchain's network layer. Networks should ensure that every validator with a single IP runs no more than one node. And have you heard about the 51% attacks?
These usually happen when a single entity has too much computational power that allows them to make major decisions without the contribution of others. That is actually one of the problems that can result from Sybil attacks.
2. Eclipse attack
Do you know that it is actually possible for adversaries to manipulate nodes one after another? In eclipse attacks, the attacker will separate a node from a network and attach it to other malicious ones, compromising incoming and outgoing data. Increasing node connections and conducting penetration testing can really help avoid such instances.
More strategies to guarantee your safety
Especially for mobile app developers, using hardware-backed key storage like TrustZone on Android can really help. You may want to encrypt the private keys using advanced algorithms like AES-256 to minimize the chances of unauthorized access. Improve privacy and security by implementing hierarchical deterministic (HD) wallets that generate new addresses every time a transaction is made.
And, of course, we cannot ignore the power of multi-factor authentication. By the way, do you know that 2FA alone can reduce exposure to targeted attacks by up to 99.9%? To strengthen the security further, consider adopting biometric authentication methods like facial recognition or fingerprint.
And it goes without saying that you must adopt secure coding practices. Consider validating and sanitizing all user inputs to avoid injection attacks. Code obfuscation and minification could come in handy when a developer wants to make reverse engineering tough for threat actors. To identify vulnerabilities early, consider regular code audits.
Final word
You can actually stand out as a developer by simply ensuring your innovations are highly secure. And what better way to distinguish yourself in the very competitive software market than to adopt measures that improve security?
Threat actors continue to increase, and anyone who ignores their presence might suffer a great loss. You can imagine what this means, especially since Cybercrime Magazine expects global cybercrime costs to grow by 15% every year for the next five years.
