Crypto Market Recovers as Possible Crime Wave Looms in 2018

The crypto market is recovering from a brutal decline in the last few days. As of this writing, most digital assets have experienced an upswing of between 10 and 20% in the last 24 hours after they experienced a massive 30% crash on Friday, December 22.

Following the crash, the total cryptocurrency market cap plunged from 650 billion dollars to 430 billion dollars. Within the last 24 hours, the market has bounced back to 585 billion dollars. It was one of the lowest moments for bitcoin sellers as the digital currency dropped from more than $20,000 to nearly $10,000 within 72 hours. However, Bitcoin has retraced its losses and currently trades at slightly more than $15,000 as of press time.

Major Cryptocurrencies Affected

On December 22, Ethereum, which is also the second largest digital currency, lost nearly 30 billion dollars in market cap. However, the cryptocurrency has since recovered, trading at 72 billion dollars. One Ethereum is currently trading at almost $720 on European exchanges and even higher on South Korean markets.

Similarly, Bitcoin Cash bore the brunt of the crash period. The digital asset experienced a cliff-drop from $3,909 to $1,970 in just 48 hours. The cryptocurrency has since restored to $3,400 as of this writing. The tremendous market shake-up came just after the alleged insider trading at Coinbase.

News—Good or Bad

Last week has been extremely volatile for the entire crypto market. Earlier in December, CBOE launched Bitcoin futures trading while CME equally initiated its own futures product on December 17. Bitcoin started experiencing increased volatility around that time.

Later in December, Charlie Lee, the founder of Litecoin, sold or donated all the Litecoins in his possession, apparently to avoid “conflict of interest.” Even so, the motive sparked questions from different quarters since only a week earlier, the cryptocurrency expert hinted at a possible major crash that would see Litecoin crash to $20.

In the footsteps of CBOE and CME, Goldman Sachs revealed its intention to launch a cryptocurrency trading platform on December 21, 2017. The platform will officially begin its operations by the end of June 2018.

While the cause for the recent dip in the crypto market is yet unknown, various possible explanations have been given. According to Charlie Shrem of Bitcoin Foundation, the cryptocurrency market has witnessed similar shake-ups before and therefore there is no cause for alarm.

Possible Cryptocurrency Crime Wave in 2018

Meanwhile, 2018 could be riddled with cryptocurrency hacks, according to information published on Yahoo! Finance. Despite the recent crash, the overall crypto market has experienced an upward trend, with Bitcoin rallying past $19,000. Major Altcoins such as Ethereum, Litecoin, and Ripple also made rapid price gains.

However, there is always a price to pay for such achievements. In this case, the increasing popularity of the crypto market is likely to trigger a marathon wave of crime. For instance, December 4 saw an ICO shut down due to a preplanned scheme to defraud investors of $15 million.

While fraud is an innate risk of cryptocurrency due to non-regulatory oversight for wallets and exchanges, hacking presents a tremendous threat to investors. The practice is so widespread and quite difficult for an average user to avoid.

A Recurring Problem

Right from its inception, hacking has been part and parcel of the cryptocurrency industry. Just last year, a report from the US Department of Homeland Security revealed that hacking happened in 33% of all Bitcoin exchanges between 2009 and 2015. In addition, individual investors have witnessed one-off scams and attacks within that period as well.

According to Yahoo! Finance, more attacks are bound to happen in the year 2018, if the crypto market continues to witness increasing prices of digital assets. The crypto market is becoming a soft target for cybercrime, with the ability to make millions of dollars from just a single attack. With soaring prices of the digital assets, more cybercriminals are sure to join the bandwagon.

Various Methods of Attack

For investors, there is a cause for worry because cybercriminals can apply many different methods to attack the cryptocurrency investments. Besides, investors can do very little to stop the vicious cycle of hacking. The absence of a reliable FDIC insurance for digital assets simply makes the situation even worse. In the end, investors are unlikely to recover any loss caused by theft or fraud in the cryptocurrency sector. Going by history, hackers often target digital wallets, cryptocurrency exchanges, DAOs, ICOs, mining companies, virtual private servers, and hosting services among others. Here are just a few examples to mention:

·         December 7, 2017: NiceHash (Mining Company) hacked, $60 million lost. Also, Tether hacked, leading to $31 million in losses

·         2016:  Bitfinex hacked, $77 million lost; DAO hacked, $50 million lost

·         2014: Mt. Gox hacked, $450 million lost

·         2012: Linode hacked, $200,000 lost; Bitfloor hacked, $250,000 lost

These attacks justify the conclusion that many of the organizations and players in the crypto market are insecure. In addition, attacks on the organizations in the crypto market are just the tip of an iceberg. Cybercriminals also work in the background to target digital wallets, exchange platforms, and investors directly.

According to a report by Chainalysis, investors have suffered attacks and fraud amounting to $225 million in 2017 alone. These happened through phishing targeted at Initial Coin Offerings (ICOs). Currently, there is a 10% possibility that investors who take part in ICOs will experience some form of hacking. This can happen not necessarily from a false ICO but from hackers impersonating as ICO officials, tricking unsuspecting investors to submit their payment details to them.

New Methods of Hacking

Among the newest methods of hacking is “phone-porting,” a situation in which a hacker can hijack your account by first stealing your phone number. Equally worse is the introduction of malware aimed at cryptocurrency market. According to Dell Secure Works, the “Cryptocurrency-Stealing Malware (CCSM), has increased by a whopping 1,123% from 2012 to 2014. Another malware strain, CryptoShuffler, has led to the loss of more than $160,000 from individual investors in 2017.

Investors should be aware of these risks, especially before they decide on a crypto investment. Issues related to the security of the account solely belong to the investor. If you for a phishing plan by hackers or the CCSM finds its way to your computer, you could easily lose all your investment. Here you have neither guarantee nor backup. The same situation is true of a digital wallet, mining company, or an exchange platform.

Few Security Measures

As an investor in the crypto market, you can apply a few security measures to protect your account:

·         Install an antivirus with anti-phishing support

·         Set up a firewall

·         Protect virtual connections with a VPN

·         Use 2-factor authentication and password managers

·         Use hardware wallets to store digital assets

Even so, in an era when even major corporations and government agencies with enough resources struggle to contain the hacking menace, no one can be 100% safe. If you invest in cryptocurrency, prepare for some losses.

While cyber attacks in cryptocurrency world have existed over the years, the rise in the prices of digital currencies might give it a boom in the coming year. More cybercrime groups are more likely to invade the market in 2018. As an investor, you should be more vigilant of these threats and take the necessary precautions to reduce the risk.

Leave a Reply

Your email address will not be published. Required fields are marked *