How do criminals steal Bitcoin?
In the media, cryptocurrencies like Bitcoin are often associated with crime. For example, it is said to be used to carry out criminal transactions, just as happens with fiat money. We also see more and more in the news that people are becoming victims of theft of their Bitcoins.
In order to avoid becoming a victim of these criminals, it is important to know how they operate. This way you will know what to do to outsmart the criminals.
Why must your personal keys remain secret?
To carry out a transaction, you need two types of keys. These are public keys, which are known to the outside world, and personal keys, which are secret to others. It is important never to share the private keys with others.
A personal key gives you access to the cryptocurrencies you own. Before sending these cryptocurrencies, you sign the transaction with this personal key. This means that if someone else is in possession of your keys, they can access and send your cryptocurrencies.
It is therefore important that your personal keys remain secret from the outside world. You do this not only by not forwarding it to anyone, but also by using the right software.
The security of exchanges and wallets
On the internet you can find a lot of crypto exchanges and software wallets. You can buy cryptocurrencies on an exchange, and then store them in a software wallet. However, it is important to choose the right exchange and wallet, so you can safely store your cryptocurrencies.
A crypto exchange and wallet store the public and private keys of their users in a database. When this is done safely, these keys are kept in cold storage. This means that the keys are on a database that is not connected to the Internet 24/7.
It is also important that the exchange and wallet are secured by proper cryptography. When a user needs to use his personal keys to carry out a transaction, this key is retrieved from the database. If this is not properly secured, criminals can access it.
Crypto exchanges and wallets are a goldmine for criminals. They will therefore do everything they can to get to the cryptocurrencies stored here. This is because a successful attack can result in all cryptocurrencies being stolen. So, with only one attack.
How can you protect yourself against such an attack?
Of course, the security of an exchange and wallet must be in order, but you can also do a lot to protect yourself against such an attack. This starts with doing research. Before you use an exchange or wallet, it is best to take a good look at the security. How are keys and cryptocurrencies stored? What forms of account security are offered? Have there been any successful hacks in the past? These are some of the questions you might ask yourself.
Second, you can make sure that you keep your cryptocurrencies themselves in a safe place. A cold wallet, also called a hardware wallet, is a lot safer than software wallets like Metamask. Determine for yourself if it would be smart to use a cold wallet. Weigh the advantages and disadvantages against each other, for example.
A cold wallet is the same as a hot wallet, only here your personal keys are not stored online. Instead, they are stored on a piece of hardware that you can disconnect from a machine. Think, for example, of a USB stick. If the hardware wallet is not connected to a computer, hackers cannot possibly access the public keys stored on it.
Bitcoin is also widely used on the dark web. This is a part of the Internet that is anything but accessible. You can only access it through a special tor-browser. This browser ensures that the identity of the user is hidden.
The marketplaces on the dark web almost exclusively accept payments with cryptocurrencies like Bitcoin. Because these kinds of websites are out of sight of governments and agencies, the chance of problems is extra high. For example, there has been an attack on Mt. Gox in the past, in which more than $100 million in Bitcoin was stolen.
Some of these types of websites look like a marketplace, when in fact it is a trap set up by hackers. Once users make a transaction, users' keys are stolen.
So, it is extra important to think about what you are going to do and where you are going to do it. This applies not only to the dark web, but to the internet as a whole. In fact, the same thing can happen to a website that is accessible to anyone. There have been thousands of people in the past who have lost Bitcoin because they used a fake website set up by criminals. Phishing is used to lure users to these types of websites.
Criminals have found different ways to steal Bitcoin from people. They do this by hacking certain systems, which gives them access to users' personal keys. This makes it seem like the hacks can be performed because of flaws in the systems, when in fact it is because of the people themselves.
Security on the Internet always starts with the user themselves. By doing proper research on certain websites and storing your cryptocurrencies in the right way, you can already prevent many problems. In addition, you can often use additional security methods that crypto exchanges or wallets offer.
Think for example of two-factor authentication, which you can use at Coinmerce. By enabling this, you have to perform an additional step before you can log in. Think for example of entering a code that you have received by email or text message. In this way, you can already avoid a lot of problems yourself.