2024 Crypto Hack Spike: Smart Contracts Aren’t the Culprit
Crypto News- Cryptocurrency hackers and exploiters seem set for a more prosperous year in 2024, with potential to outdo their 2023 feats.
In the first quarter of 2024, hackers stole digital assets worth $542.7 million, marking a 42% rise compared to the same period in 2023.
Mriganka Pattnaik, co-founder and CEO of Merkle Science, a crypto risk and intelligence platform, explains that the main reason for this surge is hackers constantly evolving their attack strategies and seeking easier targets.
Pattnaik told Cointelegraph:
“While smart contract vulnerabilities still pose a threat, hackers are increasingly targeting areas outside of smart contracts, such as private key leaks. These leaks, often resulting from phishing attacks or insecure storage, have led to significant losses.”
Phishing attacks aim to steal sensitive information like crypto wallet private keys. Another variant, known as address poisoning scams, tricks investors into sending funds to fraudulent addresses resembling ones they’ve previously used.
In May, a trader lost $71 million worth of crypto in the year’s most prominent phishing attack. The attacker deceived the trader into transferring 99% of their funds to the attacker’s address.
Interestingly, the unknown thief returned the $71 million over a week later after the incident drew the attention of blockchain investigation firms, and the attacker’s location was eventually identified. Smart contracts are becoming more secure, but hackers are finding easier prey.
Smart contract vulnerabilities were once among hackers’ top targets. However, according to Merkle Science’s 2024 HackHub report, the amount lost to smart contract vulnerabilities dropped by 92% to $179 million in 2023, down from a staggering $2.6 billion in 2022.
Private key leaks are now the primary concern, says Pattnaik
“While smart contract vulnerabilities remain an issue, a significant portion of financial losses now comes from attack vectors outside of smart contracts. The biggest security concern right now is the rapid increase in losses due to private key leaks.”
In 2023, over 55% of hacked digital assets were lost to private key leaks. The reduction in smart contract exploits is due to more advanced security tools and hackers seeking easier targets, according to Pattnaik:
“New security tools are helping to identify and fix weaknesses in smart contracts before they can be exploited. Additionally, hackers might be looking for easier targets requiring less technical skill, such as stealing private keys.”
The rising value of cryptocurrencies is attracting more hackers. Since the beginning of the year, cryptocurrency prices have appreciated significantly. According to CoinMarketCap, the total market capitalization of all cryptocurrencies rose by 54% year-to-date (YTD).
This surge not only increases the potential rewards for hackers but also draws more of them into the crypto space, says Pattnaik:
“The rise in crypto asset values creates a tempting target for hackers, as successful exploits can yield significantly higher returns than in previous years.”
In May 2024 alone, over $574 million worth of digital assets were lost across 30 individual crypto hacks, representing a 666% month-over-month increase, according to a June 1 X post by PeckShield.
Frequently Asked Questions (FAQs)
What is the reason behind the increase in cryptocurrency hacks in 2024?
The primary reason for the surge in cryptocurrency hacks in 2024 is hackers constantly changing their attack vectors and seeking easier targets. While smart contract vulnerabilities remain a concern, hackers are increasingly targeting areas outside of smart contracts, such as private key leaks.
What are private key leaks and how do they occur?
Private key leaks typically occur due to phishing attacks or insecure storage practices. Phishing attacks involve hackers attempting to steal sensitive information like crypto wallet private keys. These attacks are often carried out by redirecting users to fake websites or sending deceptive emails.
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