💰 Enhanced Security Measures Bring Down Losses in the Crypto Industry

In 2023, there was a 51% decrease in digital assets lost to hacks, scams, and exploits compared to 2022. However, an astounding $1.84 billion in cryptocurrencies was still lost.

According to a CertiK report, there were 751 security breaches in 2023 resulting in the loss of $1.8 billion in cryptocurrencies.

In 2023, there was a significant improvement in the security of digital assets. According to blockchain security firm CertiK, the amount lost to hacks, scams, and exploits decreased by 51% compared to the previous year. However, despite this progress, a staggering $1.84 billion in cryptocurrencies was still lost in 751 security breaches throughout the year ¹.

Major Exploits and Incidents

The recently published 2023 “Hack3d” report highlights the main incidents that contributed to this substantial figure ². Although the losses in 2023 were down by half compared to 2022, CertiK analysts emphasized that the number is still too high ³.

Private Key Compromises

One of the primary causes behind the breaches was private key compromises. In fact, six out of the ten most costly security incidents in 2023 were due to such compromises ⁴. These attacks resulted in the loss of $880,892,924 worth of crypto assets over just 47 incidents, accounting for nearly half of all financial losses ⁵. However, it is important to note that these compromises represented only 6.3% of all security breaches during that year ⁶.

In order to prevent future breaches, CertiK recommends implementing private key management best practices, such as using multi-signature wallets, hardware wallets, access control policies, encrypted storage, and regularly monitoring the use of private keys ⁷.

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Emerging Trend: Retroactive Bug Bounties

The Hack3d report also sheds light on a new trend in 2023: “retroactive bug bounties.” In these cases, hackers returned a portion of the stolen funds, amounting to $219 million across 36 events, which represents around 12% of the total losses ⁸.

Some protocols successfully negotiated “grey hat” bounties, whereby hackers returned a significant portion of the stolen funds. For instance, Euler Finance, after suffering a flash loan attack that resulted in over $197 million in losses, offered a $1 million bounty for information leading to the arrest of the attackers and demanded the return of the stolen funds ⁹. Ultimately, the Euler exploiter returned 84,951 Ether (approximately $147.8 million) and $29.9 million in DAI stablecoin ¹⁰.

Positive Outlook for 2024

Ronghui Gu, the co-founder of CertiK, expressed optimism about the future of blockchain security. It is expected that bug bounty platforms and other proactive security measures will continue to grow, leading to a decline in losses throughout 2024 ¹¹. However, with the predicted resurgence of a bull market, the crypto industry’s security protocols will face a significant test ¹².

🤔 Q&A: What Readers Might Find Interesting or Have Concerns About

Q: How can private key compromises be prevented?

A: To avoid private key compromises, it is essential to use robust security measures such as multi-signature wallets, hardware wallets, access control policies, encrypted storage, and regular monitoring of private key usage ¹³.

Q: What are retroactive bug bounties?

A: Retroactive bug bounties involve hackers returning a portion of the stolen funds. In 2023, this trend resulted in $219 million being returned across 36 events, accounting for approximately 12% of the total losses ¹⁴.

Q: What is the industry’s outlook for 2024?

A: The co-founder of CertiK is optimistic about improved security in 2024, citing the growth of bug bounty platforms and proactive security measures. However, the industry will face a crucial test with the anticipated resurgence of a bull market ¹⁵.

References

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Disclaimer: The information provided in this article is for educational and informational purposes only and should not be considered as financial or investment advice.

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1. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

2. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

3. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

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5. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

6. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

7. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

8. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

9. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

10. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

11. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

12. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

13. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

14. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

15. CertiK. (2024, January 4). Hack3d: 2023 report reveals $1.84B lost across 751 security breaches. CertiK Blog. Link↩︎

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