Crypto Investors Lost Nearly $4 Billion to Hackers Last Year

According to a report by The Guardian, last year was the worst year for cryptocurrency hacks. Chainalysis latest analysis.

Cryptocurrency hackers stole $3.8 billion in 2022, according to the blockchain analytics firm’s report — up from In 2021, $3.3 billion. The study found that October had the highest number crypto hacks, with $775.7 Million stolen in 32 attacks.

Here are some ways you can protect yourself from cyber-thieves.

Decentralized Finance protocolsAccording to the report, DeFi protocols (or 82% or $3.1 Billion) accounted for most crypto thefts by hackers in 2022.

A series of codes called DeFi protocols determine how virtual currencies can be used on a Blockchain network. Smart contracts are an example. These digital contracts provide the foundation technology that allows crypto transactions to take place. Smart contracts are governed by “if/then” Commands: If X is given, then execute Y.

DeFi’s smart contracts allow users to make and borrow without intermediaries. Once the terms and conditions of the smart contract are met, the transaction takes place automatically. Similar to a vending machines.

According to the report, the majority of digital funds were stolen using cross-chain bridge apps. This software allows users the ability to transfer their cryptocurrency across different blockchains.

Hackers may be attracted to cross-chain bridges because when users deposit their digital coins in smart contracts that can be transferred to another Blockchain, smart contracts become a sort of central storehouse.

“A more desirable honeypot could scarcely be imagined,” Chainalysis reported in its report.  “If a bridge gets big enough, any error in its underlying smart contract code or other potential weak spot is almost sure to eventually be found and exploited by bad actors.”

Make sure you thoroughly investigate the software that you are using to store and transfer your virtual currency.

There are Virtual wallets Max Krupyshev is the co-founder of CoinsPaid and the leader in crypto-payments ecosystem CoinsPaid. He tells CNBC Make It, that this will allow you to store your crypto safely and protect it against online attacks. It’s crucial to determine first which cryptocurrency you want. Type of wallet It makes sense to you.

Many issues related to crypto hacking can be attributed to insufficient security, David Schwed (chief operating officer at Halborn’s blockchain cybersecurity firm) says in the report.

“The DeFi community generally isn’t demanding better security — they want to go to protocols with high yields,” He says. “But those incentives lead to trouble down the road.”

DeFi developers could instead borrow security techniques used by traditional financial institutions to protect their platforms. Schwed explains that this includes testing protocols with simulated attacks, monitoring the blockchain closely for suspicious activity, and creating processes that will halt transactions in the event of suspicious activity.

“DeFi protocols will greatly benefit from adopting better security in order for the ecosystem to grow, thrive, and eventually penetrate the mainstream,” Chainalysis reports.

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