How to protect your crypto from hackers in 2023

The crypto market has witnessed countless hacks and exploits over the course of the year. This has directly affected the usual adoption rate. Therefore, technological innovation is a must to protect customers’ assets and help stock exchanges and companies stay one step ahead of hackers.

Numerous security challenges, including thefts, hacks and fraudulent activities, have accompanied the rise of cryptocurrencies and blockchain technology. These incidents have damaged the industry’s reputation and hindered mainstream adoption.

Explore various vulnerabilities

Hackers engaging in illegal activities related to crypto are on the rise. The spotlight is once again on the vulnerabilities of crypto exchanges and the assets they trade. FTX’s $400 million hack last November was a critical factor in its downfall, from which the industry is still reeling. Hot wallets are particularly vulnerable, and Bitcoin ATM manufacturers have gained a massive reputation due to recent exploits.

Overall, the crypto industry faces a number of security challenges. Some of the main security obstacles facing the crypto industry are:

1. Hacking: One of the crypto industry’s most important security challenges is hacking. Cryptocurrencies are stored in digital wallets; if they are not adequately secured, they can be hacked and the funds can be stolen.
2. Phishing scam: Another significant security challenge facing the crypto industry is phishing scams. Cybercriminals often use phishing emails and websites to trick people into giving them access to their cryptocurrency wallets.
3. Insider threats: Insider threats can also pose a significant security challenge to the crypto industry. Employees with access to sensitive information or cryptocurrency wallets may abuse their privileges or leak information to external parties.
4. Damaged product: Malware such as viruses, trojans and ransomware can also pose a significant threat to the security of the crypto industry. Malware can be used to steal private keys or other sensitive information from digital wallets.
5. Regulatory challenges: The crypto industry also faces regulatory challenges, particularly around issues such as money laundering, terrorist financing and tax evasion. These challenges can affect industry security by making it more difficult to implement adequate security measures.

The security challenges facing the crypto industry are complex and multifaceted. Therefore, it requires a comprehensive approach that includes technological solutions to start the journey.

Looking for answers to increase credibility

Several technological innovations can help protect customers’ assets and enable exchanges and firms to stay one step ahead of hackers. BeInCrypto reached out to various industry experts and identified the areas where the need for better security is most acute.

One of the most promising innovations is multipart calculation (MPC) technology. MPC allows multiple parties to jointly compute a function without sharing their private inputs. In the blockchain and crypto context, MPC protects private keys required to access a user’s funds. By splitting the key into multiple parts and distributing it between different parties, MPC can prevent a single point of failure and increase security.

BeInCrypto contacted Halborn, a blockchain cybersecurity firm, about the topic. When asked about MPC’s key features and benefits, the team responded:

“If a user’s private key is lost or stolen, funds stored in the wallet may be stolen or remain inaccessible forever. MPC wallets attempt to solve the problems of traditional cryptocurrency wallets by redundantly distributing the ownership of a private key between n parties.

Another innovation that can protect the customer’s assets is threshold signatures (TSS). Like MPC, threshold signatures divide a private key into multiple parts and distribute it among different parties. But in this case, the essential parts are used to create a signature instead of accessing funds.

By requiring a threshold number of signatures to execute a transaction, threshold signatures can prevent unauthorized access and enable secure transactions.

Other key areas to consider

Moving on, another technology that can strengthen security is homomorphic encryption. Homomorphic encryption makes it possible to perform calculations on encrypted data without decrypting it. In the context of blockchain and crypto, homomorphic encryption can protect sensitive data, such as transaction details and user identities. By encrypting this data, homomorphic encryption can prevent unauthorized access and enable secure storage and transmission.

Ravital Solomon, co-founder and CEO of Sun cream, believes fully homomorphic encryption (FHE) is even more promising in its potential to strengthen blockchain privacy. Solomon explained that the technology allows individuals to perform calculations on encrypted data without decrypting it.

Zero proof of knowledge also improve security in the crypto industry. Zero-Knowledge Proof allows one party to prove to another party that they know a secret without revealing it. In blockchain and crypto, zero-knowledge proof can be used to verify transactions without revealing the identity of the parties or the details of the transaction. This can enable secure and private transactions while preserving the transparency and immutability of the blockchain.

Finally, decentralized identity (DID) solutions are important in the crypto industry. DID solutions enable users to control their identity and personal data without relying on centralized authorities or intermediaries. By using decentralized identifiers and verifiable credentials, DID solutions can prevent identity theft, improve privacy and enable secure access to digital services.

Technological advances are a must

Technological innovations are essential to protect customer assets and help exchanges and firms stay one step ahead of hackers. The crypto industry faces a number of security challenges. Still, several technological innovations can protect customers’ assets and enable businesses and firms to stay one step ahead of hackers.

These innovations include multiparty computation, threshold signatures, homomorphic encryption, zero-knowledge proofs, and decentralized identity solutions. By adopting these technologies and investing in security, the crypto industry can increase trust, promote mainstream adoption, and realize the full potential of blockchain and crypto.