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From Safe to Sorry: Crypto Wallets and Their Weak Spots

From Safe to Sorry: Crypto Wallets and Their Weak Spots

By SimpleSwap | SimpleSwap Blog | 5 Oct 2023


Cryptocurrency wallets today are one of the best ways to store electronic funds. Machines are responsible for security here. To access their funds users have to type in passwords or private keys, which is a complex encryption algorithm that is almost impossible to hack.

Based on this, it may seem that crypto wallets are “bulletproof”. Unfortunately, it is not entirely true. Hackers came up with tricky schemes in order to get their hands on crypto assets. Let’s see how modern wallets can be cracked and how to keep funds safe.

System failures and bugs

Not a single artificial intelligence is insured against errors in operation and technical failures. Developers, of course, try to minimize the possibility of bugs in their projects by constantly updating security systems. But unexpected incidents still might occur.

The crypto wallet uses a random number generator (RNG) to generate a private key. Usually it consists of randomly arranged characters of the latin alphabet and numbers. In case of a bug, the RNG provides a string with a large number of zeros as a key, and the system skips it and uses it for further operation of the crypto wallet. So the correct, but insecure private key will be sewn. Hackers call it “Weak Address”.

Scammers have long learned to create bots for their dishonest purposes. With their help, they track Weak Addresses in the network and steal them. It gives hackers access to someone’s crypto wallet.

Solution. Is it possible to avoid hackers in this situation? Sure. You just need to check the generated private key first. It is enough to make sure that it does not consist of 90% of zeros. This can be done using a special application, such as Swippcore, for instance.

Random Vulnerability

Another failure in the operation of RNG is called “Random Vulnerability”. It applies to the process of conducting and processing of transactions. To send funds from one crypto wallet to another, the system needs to sign the transaction with two codes – a private key and a random number (a nonce).

If the RNG fails, the system can sign different transactions with the same nonce. Calculating this error is difficult, but scammers have learned to do this, too. Hackers’ bots match transaction signatures, and if such a bug is found, decryption occurs immediately. In case of successful decryption, the scammers will have access to the owner's crypto wallet.

Solution. You can protect yourself from such a hacking format if you update all applications of crypto wallets in time.

Phishing

The most common and easiest way to do an online scam is phishing. It got to the Crypto World and, unfortunately, took roots here. Phishing differs from all other fraudulent operations: the user voluntarily gives all his keys and passwords to the hackers, believing in his manipulation. The scammer may pose as a representative of the exchange, a support employee, a security specialist conducting a standard check, etc.

Even crypto whales are not immune to phishing. Hackers carefully and patiently “hunt” them, inventing personalized approach. This helps them to get as much personal data as possible, ingratiate themselves and lure out desired information.

Solution. Insuring yourself against phishing attacks is very simple: you should never, under any circumstances, share your private keys with anyone.

A number generator

There are websites that allow users to generate a private code for a crypto wallet online. Such services are actively used by hackers: on such sites there are often repetitions, and scammers are happy to take advantage of this.

Solution. That’s why you should not use online services for selecting keys for crypto wallets. You only need to create unique addresses in hardware devices or in specialized wallet applications.

GitHub

GitHub is the most popular IT project hosting platform. Developers of blockchain applications and smart contracts upload data here to test its functionality. Sometimes they forget to erase the keys from there, and all passwords get into the public domain. Hackers often monitor GitHub and its counterparts to track down such errors and get into other people's crypto wallets.

Solution. Do not store passwords to your crypto wallet on your computer in the public domain, for example, in notes. You should not use your personal crypto wallet for work purposes like testing either.

What you need to create a secure crypto wallet

  1. Do not generate the code for the private key through the website.
  2. Make sure that the key is reliable immediately on the spot, and not after several months. If the security code is dominated by zeros, it is vulnerable and needs to be changed.
  3. Crypto wallet and related applications need to be updated periodically.
  4. Do not tell your private keys to third parties under any pretext.
  5. Don’t keep your passwords in the public domain.

Conclusion

In the grand tapestry of the Crypto World, where every line of code is scrutinized and every cryptographic puzzle is solved, one might assume that our fortunes are tucked away behind impregnable locks. However, now we've come to a humbling realization: even the most intricate encryption can be met with a simple oversight.

Just as our digital age has ushered in unprecedented opportunities, it has also offered hackers new canvases on which to paint their exploits. It seems that every padlock has its key, and for every encryption, there's a loophole waiting to be discovered.

In this dance between security and vulnerability, let's remember that the Crypto World is a realm of pioneers, risk-takers, and curious minds. As we navigate the tumultuous waters of crypto wallet weaknesses, we'll inevitably encounter storms of uncertainty. But isn't that what makes this journey all the more thrilling?

If you want to learn more interesting facts about crypto then check out our blog! You might like our articles “Crypto Dust Attacks Explained” and “How to Protect Yourself in the Metaverse”.

The easiest way to buy, sell or exchange coins is to use SimpleSwap services.
SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.

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