How to protect crypto from hacks, bull market trend confirmed

Barely a week goes by without some news of crypto hacks. Despite the seemingly constant hacking and theft, losses to hacks and other security breaches across the crypto industry actually saw a decline in the first half of 2023.

While hackers looted over $300 million from crypto exchanges, Bitcoin wallets, and Web3 protocols in the second quarter, the figure was more than 50% down compared to the same period last year. A report by blockchain security firm TRM Labs also indicated losses to hackers fell a massive 70% in the first quarter of 2023.

This comes after a relentless wave ended with hackers stealing a record $3.8 billion across 2022. More than $1.4 billion worth of digital assets were lost in the second half of the year alone, staggering crypto heists that make the year the worst in history to date. 

And then… wallop, the third quarter of 2023 saw a fresh wave that pushed total stolen assets to near $1 billion. So what is going on?

Did Crypto hacks fall in the first half of 2023?

While the attacks are likely to keep coming, industry players are getting more and more proactive in terms of tightening security. Leading the charge are top crypto brokers like Uphold and Bitpanda . Social trading giant eToro also stands out among companies doing everything to protect user funds.

As such, blockchain security and analytics firms have attributed cryptocurrency industry’s continued vulnerability evaluations and risk mitigation to the decline in attacks in the first half of the year. 

Hackers are also likely to have found it difficult to breach exchanges due to the increased use of artificial intelligence (AI) and key upgrades that result in better blockchain protocols. Platforms are also making it difficult for attackers with security audits aimed at identifying inherent risks, while secure code scanning, penetration tests and red teaming are key to security enhancements.

Bug bounty programs are also critical to this war against hackers. They are just employed when hunting for vulnerabilities, but have many times more helped recover stolen funds. For example, Curve Finance outlined a 10% bounty that sought to recover 90% of the stolen funds from hackers. Bounties have also helped unmask attackers, with law enforcement involvement increasingly a big deterrent .

Bull market in full swing

With the crypto trend reversal confirmed across numerous technical indicators, trend lines and price points – all well-respected analysts and traders agree that “Bitcoin has broken out” of its “nearly two year long” downtrend. 

While that doesn’t mean it’s “up only” from here, it does mean that most analysts expect cryptocurrencies to rise more than fall until a bearish trend presents itself. 

Of course, with all the hacking concerns still within the community, many users are wondering how they can benefit from owning or trading cryptocurrency without having it swiped away from them. 

We’ve put together some information to help you invest safely. 

So, how do you beat the hacker? Get in, get out

The answer is essentially very simple: store your funds in a cold wallet. 

Cold wallets, also known as hardware wallets are the way to fully own and protect your assets in the digital world. However, you need an ‘on-ramp’ which is essentially a way to get your money from your bank account > into a cryptocurrency like Bitcoin > and then into your cold wallet. 

Just follow these steps: 

Step 1. Sign up to eToro

eToro is the safest crypto exchange to get started with. Create an account and supply a copy of your photo ID for verification. Don’t worry, you won’t be leaving your cryptocurrency on here. 

Step 2. Make a deposit

Add your funds via a card payment, bank transfer or an alternative payment method. You can start with as little as £10, but my hunch is that your goal is to move as much as you can. So deposit the amount you want to shift into cryptocurrency. 

Step 3. Buy Bitcoin (or any other crypto)

Type BTC into the search box then click ‘trade’ or ‘buy’. Essentially, this is the conversion process and once this is done, you’ll have your cryptocurrency ready. 

Now you own Bitcoin, wonderful! Now it’s just about making sure it’s protected… 

Step 4. Set up a cold wallet

You essentially have two options here. One is slightly more beginner friendly, and the other… isn’t. 

1) https://www.bitaddress.org/ use a service like this to generate a Bitcoin wallet address. Make sure that address, along with your public and private keys never touch the internet. Save them, hold them dearly. 

2) https://www.ledger.com/ alternatively, buy a hardware wallet from a company like Ledger. I have one of these, and it’s fantastic. It’s not too dissimilar from the above, it’s just a little bit easier to manage as you have a tool built for it, which guides you through the process and protects you along the way. 

Is hacking more of a threat than ever?

A Chainalysis report published in February noted that 2022 was the biggest year for crypto hackers as DeFI protocols lost $3.8 billion to attacks. A majority of these were by North Korea-linked actors

As highlighted by TRM Labs in an industry report, there were more than 50 crypto hacks in the first quarter of 2022 and more than 60 in the fourth quarter. The two quarters accounted for more than $1.2 billion and $1.4 billion respectively. In total, hackers stole over $3 billion in crypto assets. Then the number of attacks fell sharply in Q1, 2023.

But recent crypto heists are rekindling fears that historical figures in relation to the number of hacks and looted funds might yet be revisited. 

The industry still reels from the impact of the infamous Mt. Gox hack. Recent attacks such as the $625 million exploit of Axie Infinity game’s Ronin bridge and $325 million heist from cross-chain service Wormhole might not be the biggest and most devastating yet.

While the first half of 2023 saw a dip in hacks, July recorded a spike and September marks the worst month for the year so far.

Mixin Network’s breach that resulted in over $200 million worth of crypto lost brought the total to nearly $330 million. It’s a scenario that had Q3, 2023 the worst quarter for the year as the industry stares at close to $1 billion in exploit losses. A notable fact is that most of these attacks have links to the Lazarus Group, a hacker collective linked to North Korea.  

According to data from Dune Analytics, the Lazarus Group holds roughly $46 million in stolen crypto assets.

Stay safu out there

The cryptocurrency ecosystem is experiencing a significant decrease in the number of crypto hacks and amounts stolen in the first half of 2023 is a key development. However, while the industry takes a proactive approach towards addressing inherent vulnerabilities, the one thing clear is that challenges remain. 

Crypto attacks, including by state-sponsored hackers as North Korea does, is the war the industry is fighting and has to win. Crypto users should know that self-custody or use of reputable exchanges are some of the measures that can greatly enhance their protection. 

Own your assets.