Even as the crypto industry is experiencing a major market downturn, pundits predict that the worldwide adoption rate of cryptocurrency will keep rising. Along with the increased popularity, crypto’s underlying technology is evolving, leaving sufficient space for hackers to exploit the new blockchain security vulnerabilities. 

These factors have contributed to the emergence of some serious issues with blockchain and cyber security. In fact, according to the respected crypto-security firm Immunefi, in only the first quartal of 2022, there was more than $1.22 billion worth of stolen crypto. This is almost eight times more than the amount of stolen funds in Q1 2021. 

But, what are the risks of cryptocurrency exactly? In the article below, we’ll acquaint you with the most dangerous threats.

1) NFT Security Threats

Thanks to a massive media presence and the large sums of money that are involved, NFTs (non-fungible tokens) have attracted many new users to the realm of crypto. In the eyes of cybercriminals, the newbies are sheep just waiting to be exploited. Thus, they have devised ways to do that.

One of the largest NFT marketplaces, OpenSea, suffered several security breaches recently. The biggest one occurred this February, when $1.7 million worth of NTFs were stolen in a phishing attack. The hackers managed to trick the unfortunate users into signing a partial smart contract. Then, with a call to their own contract, the hackers managed to transfer ownership of the NFTs.

Phishing attacks are among the most common types of cyber security risks, and the world of crypto is no exception. In comparison, other OpenSea vulnerabilities are more unique.

For instance, attackers could send malicious, free NFTs to users. If the user interacted with such an NFT, he or she would expose their wallet details, making it possible for attackers to drain the user’s funds. OpenSea has since fixed this vulnerability, but we still warn the readers to never sign any remotely suspicious transactions in NFT marketplaces, as attackers will likely use similar tactics again.

2) Fraudulent Trading Bots

Good trading bots can be of great assistance to users who are looking to fully or partially automatize the crypto trading process. Unfortunately, according to ScammerWatch, many trading bots are the product of their developers’ fraudulent intentions. 

The goal is to attract investors who haven’t done enough research and who have settled on the first spotted opportunity for making a decent passive profit. Scam trading bots like BitQH may seem legit at first glance, but upon closer examination, there exist some red flags that give them away.    

Telltale signs to look for include: fabricated awards that the bot had supposedly received, but that don’t actually exist; contradicting statements on the official website; weirdly enthusiastic reviews that present the bot as a perfect product; a provided physical address of the developers’ company, where such a company never existed.

With the number of fraudulent trading bots out there, this remains one of the biggest risks of cryptocurrency trading in 2022.

3) DeFi’s Increased Vulnerability

DeFi (decentralized finance) eliminates the need for banks, enabling the users to trade without such an intermediary. This concept appeals to people, as evidenced by this sector’s market cap increasing from about $50 million in 2017, to some $141 billion today, according to CoinGecko. 

DeFi platforms have received criticism that, thanks to the fast development time, many vulnerabilities are left open for attackers to exploit. If we look at the statistics for 2021, we can see that over $1.5 billion was stolen from DeFi platforms last year, which is a much larger sum than $134 million, which was stolen in 2020. This was due to 55 hacker attacks (in comparison, there were only 16 DeFi hacks in 2020).

The biggest hack occurred on the Poly Network, and resulted in the temporary loss of over $600 million. Interestingly, the hacker later returned the funds, but his attack is one of the examples showing just how vulnerable DeFi is.

The average user can’t do much to protect his/her funds, apart from the regular due diligence when handling sensitive data such as passwords and seed phrases.

4) Metaverse: A Heaven for Scammers 

Meta, the company formerly known as Facebook, caused a sensation when it announced in October 2021 that it will be focusing on building a metaverse infrastructure. But, even then, there were a number of functional metaverse projects out there, such as Decentraland, Axie Infinity, and the Sandbox.

This is especially interesting to hackers, as the users first need to connect their crypto wallets, such as MetaMask, in order to access the virtual worlds of the metaverse. And where there are wallets, there are also thieves.

So far, there have already been many instances of metaverse scams, such as fake airdrops, and compromised keys. Metaverse phishing attacks are especially on the rise, with many users being tricked into giving their credentials to scammers. Virtual reality technologies like HTC Vive and Oculus, which are an important component of metaverse interaction, were also targeted by hacker attacks in the past.

As big companies such as Samsung, which recently opened a virtual store in Decentraland, continue to invest, there’s no doubt that metaverse will keep growing. And with such growth, more users will be drawn to the metaverse, leading to it becoming increasingly dangerous and attractive to cybercriminals. So, stay vigilant.