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How is Cryptocurrency being used in Cybercrime?

Pragya Soni
Mar 01, 2022

It has been a little over a decade since we have heard the term cryptocurrency for the first time. But even in this short span, it has been attacked by criminals an infinite number of times.

The history of the crypto market is itself proof of this statement. What makes cryptocurrencies so vulnerable to cyberattacks? And how do these cybercrimes take place?

In this blog we will study how cryptocurrencies are affected by cybercrime.

Glossary

Before relating the two important terms together i.e., cryptocurrency and cybercrime. Let us first consider these terms separately. Here is the list of important terms that we are going to repeat again and again in the blog.

Cryptocurrency: Cryptocurrency is often referred to as the virtual currency or the digital currency. Secured by cryptography, cryptocurrency is the decentralized network that works on blockchain technology.

Bitcoin: One of the most leading cryptocurrencies. Bitcoin has high interchange and exchange value as compared to other altcoins.

Bitcoin address : Bitcoin addresses are 26-to-34-character long strings. It directly connects the user to a bitcoin payment window.

Cybercrime : Cybercrime is a criminal activity related to the virtual world. It is not meant as some physical criminal activity of the world such as kidnapping, murder, etc.

But it is the criminal activity that happens by the medium of digital devices such as computers and the internet. It is the most prevalent criminal record in the modern world. The Information Technology Act provides necessary information related to it.

Cybersecurity : Cybersecurity is the steps and guidelines taken to prevent activities related to cybercrime. Cybersecurity, sometimes referred to as IT security, is the practice of protecting critical systems and digital attacks.

Cryptocurrency and Cybercrime

Day by day, the frequencies of cyberattacks are increasing. The ransom payments made to the hackers are also exceeding the count every day. One of the basic characteristics of cryptocurrency is that it can be traded anonymously. Thus, it emerges as the most potential platform for the cyber extortionists.

How cryptocurrency supports cybercrime?

So just like any cybercrime, it starts with a ransomware attack on a company or organization. Later, the executive realizes that his business site is down and broken. Once the administrator overrides don’t work on sites, a random mail will arrive via Gmail or other email.

That mail might contain a Bitcoin address where the payments are required to be made, if the company wants to make their site operational again along with the deadline. This is how cryptocurrency plays its role in enhancing the cyber risks and cybercrimes.

Also Read | What is Targeted Ransomware?

Reasons why cryptocurrencies are appealing to cybercriminals

Cryptocurrencies are not regularly governed by the government; this makes them more vulnerable to cybercrime around the globe. Also, cryptocurrencies carry millions of dollars across borders without detection, thus, criminals find it the most suitable slot to attack. Here are some top reasons that make cryptocurrencies vulnerable to cybercrimes.

Pseudonymous

This is the major reason that makes the cryptocurrency so sensitive. The transactions and accounts in cryptography are not connected to the real-world identities. Most of the time it works on digital strings. So, it becomes quite easier for the criminals to hide their identity while using crypto.

Easier access

When payments are made from Bitcoin addresses the hackers or criminals can easily create new addresses. Unlike the real world, creating a new identity in a crypto network is not a big deal and doesn’t require much validation and documentation.

These addresses help to analyze the transaction flow, but still doesn’t allow them to connect with the real-world identity of the users.

Fastest network

Physical and traditional transactions take time, this helps the users to increase more security to their money. But digital transactions and crypto transactions are done nearly in fractions of seconds. Thus, there is very little or no time to ensure the intermediate security and safety from the cyber-attacks.

Global network

Unlike physical money, which is validated to a particular region or nation, cryptocurrency is a global standard. It is accepted anywhere and everywhere. A man from Russia can easily manage digital trade with a person from America. This easy access to several locations increases the vulnerability of cryptocurrency.

How are Cyber attackers taking advantage of Cryptocurrencies?

Types of attack via cryptocurrency

There are different types of cyberattacks where criminals are easing the process by the means of cryptocurrency. Here are the few examples:

Ransomware

Ransomware is the most advanced trend in history. It is designed to extort money by encrypting user data. As explained above, ransomware flashes a message or mail with a link inside.

This message is a threat asking the user to deposit the money if he wants to regain his access or control. The criminal can't be traced or connected to real-world data and asks a heavy amount by the means of bitcoin or any other altcoin.

In 2017, two ransomware WannaCry and NotPetya had brought down the market and ruined many companies and organizations. Well, reason can also contribute to the steep rise in bitcoin prices the same year.

DDoS Extortion

DDoS extortion also known as RDoS which is expanded as ransom-driven DDoS. It is the oldest and easiest way to earn profits. These kinds of malware are very capable of using cryptocurrency payments. And are very difficult for the investigators to track the flow of money.

And thus, money is easily swept from victims to criminals. The criminals hijack the operational site by a DDoS attack, and then ask the organizations to pay them a heft bitcoin amount if they want to regain the control of their site.

In 2014, an extortion technique DD4BC emerged that attacked several sites. Later in 2016, the group was arrested by Europol. Even after that, attackers did several minor DDoS attacks to let the public feel the fear of their powers and capabilities.

Cryptojacking

Crypto Jacking is the type of attack in which hackers use computer power of a compromised device to generate cryptocurrency. This is done without letting the owner be aware of it.

Cryptojacking can affect digital devices such as smartphones, servers, computers or IoT devices. The result of Cryptojacking is device slowdown, increased energy consumption, overheating batteries, reduction in productivity and device failure.

In 2017 and 2018, Cryptojacking shot the crypto market. The reason behind it is increase in crypto prices and general revival of the crypto market.

Cryptomining

Cryptomining is also responsible for illegal mining of cryptocurrencies. There are two types of Crypto Mining, active Crypto Mining and passive Crypto Mining.

Both techniques are used to exploit a victim’s processing power without authorization from the owners. Earlier, Bitcoin was the target of criminals, but later their focus shifted to Monero in 2019.

Cryptocurrency Hacks

Cryptocurrencies itself have been hacked by criminals so many times in history. It has always been an appealing target to the hackers. Hackers attack on crypto assets, crypto exchanges and other platforms.

In 2018, many cryptocurrencies were hacked, and more than 1-billion-dollar cryptocurrencies were stolen from exchanges and platforms.

Also Read | What is Cryptoeconomics?

How to protect Cryptocurrencies from Cybercrime?

There are steps that can be taken to protect cryptocurrencies from cybercrime and related criminal activities.

Don’t open suspicious email attachments or unknown links.
Make regular offline backups and install software updates from time to time.
Don’t install free apps from unofficial sources.
Use strong passwords for computers, mobile and IoT devices.
Use highly approved antivirus software.
Check when the computer or device lags or stops working.
Consider a DDoS protection solution to protect the major and minor attacks

Also Read | What Encrypting Viruses Are?

Cryptocurrency is still in its neonatal stage in India. Roughly the count of its existence is less than a decade. But still, it is prone to different risks. Even the history itself is proof of how many times cryptocurrencies have been attacked by hackers. Therefore, protection and security should be increased to protect this field.

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How is Cryptocurrency being used in Cybercrime?

Glossary

Cryptocurrency and Cybercrime

How cryptocurrency supports cybercrime?

Reasons why cryptocurrencies are appealing to cybercriminals

Pseudonymous

Easier access

Fastest network

Global network

How are Cyber attackers taking advantage of Cryptocurrencies?

Ransomware

DDoS Extortion

Cryptojacking

Cryptomining

Cryptocurrency Hacks

How to protect Cryptocurrencies from Cybercrime?

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