6 Cryptocurrency Risks and Threats in 2021 (Update)

6 Cryptocurrency Risks and Threats in 2021 (Update)

Data Breach

In early March, the Trident Crypto Fund data breach exposed more than a quarter of a million passwords along with email addresses, cell phone numbers and IP addresses.

The stolen passwords were encrypted, but the hackers managed to decrypt them and publish them online. This incident shows one of the main vulnerabilities of Bitcoin and other cryptocurrencies.

Cryptographically secured and chain-backed currencies may be perfectly secure, but intermediaries are not. Thus, stealing these digital assets is still possible.

Crypto exchanges, online payment systems, and other financial service companies offering cryptocurrency-related services need to employ high-level data breach security solutions to address the threats posed to digital currencies.

They are a prime target for cyber thieves targeting digital assets and malicious players seeking to discredit cryptocurrencies.

Crypto Mining Threats

Cryptojacking may slow down with the introduction of effective measures to tackle the problem, but it is still one of the biggest threats to cryptocurrencies in 2020.

The use of malware to steal computing resources from unsuspecting computer users is unlikely to disappear completely, especially when the price of cryptocurrencies rises.

Recently, security researchers discovered a botnet referred to as “Vollgar,” which is believed to have infected up to 3,000 Microsoft SQL database servers every day since 2018. This crypto mining malware mines the digital currency “vollar” as well as monero. It infects servers with weak security systems through brute force attacks.

Crypto mining does not steal coins or information from infected devices or servers. However, they significantly affect the performance of computers turning into miners who are for the benefit of the perpetrators.

Ransomware and Blackmail

The previous year may have seen a reduction in the volume of ransomware attacks, but this does not indicate a reduction in the lucrativeness of this attack vector.

Cyber ​​threats have evolved into something more sophisticated and disruptive, instead of focusing on mass attacks. The latest ransomware statistics show the emergence of the so-called “big game hunting.”

Companies are forced to pay ransoms under threat of interruptions in their operations, which could mean serious losses and reputational damage. Also, news of incidents of cyberattacks can damage customers' perceptions of security – not to mention possible penalties for any privacy breach or data loss.

Bitcoin and other digital currencies are the ransom of choice for most ransomware attackers, especially since crypto assets allow anonymous ownership and use of funds. This anonymity is the reason why black markets use cryptocurrencies alongside peer-to-peer tumblers or mixers. The movement of funds can be traced on the blockchain, but it will be very difficult to identify the ransom recipient.

Unfriendly Regulation

Another significant cryptocurrency risk factor in 2020 is the possibility of unfriendly regulation. Many governments are already studying the regulations of bitcoin and other crypto assets.

While many countries have shown an openness to using crypto assets, others still have vague and restrictive policies.

Banks are trying to incorporate crypto assets into the mainstream financial system, but most efforts are centered on controlling digital currencies and controlling their democratizing nature.

 

In China, a lot of activity is related to bitcoin. The country hosts most of the world's network hashrates. It is also home to many of the world's largest cryptocurrency companies.

In addition, it has a dynamic OTC trading sector, which accounts for the huge demand on the bitcoin network. However, the Chinese government appears to have a love-hate relationship with cryptocurrencies in general.

The Chinese government plans to release a state-operated cryptocurrency in 2020. This may sound like an idea for a cryptocurrency, but proponents of a decentralized currency argue that China's state involvement is counterintuitive. This is set to affect Bitcoin negatively, especially in terms of price and growth.

Ownership Imbalance

With regards to regulatory risk, it also shows how much of the world's crypto assets are held by some person or organization – sometimes called the “crypto whale” because of their large holdings.

Their decisions can easily influence the behavior of these digital assets. While crypto advocates are vigorously promoting the decentralization and democratization of currencies, it's hard to ignore the fact that big crypto holders have an opinion on what's going on with the currency.