Vampire attacks are a type of security attack that destroys opportunities to take back assets once the hacker has possession of it. In other words, vampire attacks steal assets out of cold storage by implementing new spending rules in the victim’s wallet.
Introduction to vampire attacks
Crypto attacks come in many different forms, each with its own unique goals and strategies. Here, we’ll take a look at the three most common types of crypto attacks: Vampire attacks, Sybil attacks, and 51% attacks.
A vampire attack is a type of cryptographic attack that involves an attacker “sucking” the value out of a digital asset by transferring it to themselves. In most cases, the attacker will first buy a large amount of the asset (usually using real-world currency) and then wait for the price to increase. Once the price has gone up, the attacker will begin selling off their holdings, driving the price down and causing other investors to panic sell. The attacker can then buy more of the asset at a lower price before repeating the process.
While vampire attacks can be used on any digital asset, they are particularly common in the world of Initial Coin Offerings (ICOs). This is because ICO investors often have little understanding of how cryptocurrency prices fluctuate and are more likely to sell their tokens at a loss when they see the price falling.
Understanding Sybil Attacks
A Sybil attack is a type of cryptographic attack where an attacker creates multiple fake identities in order to gain control of a network or system. The attacker does this by creating multiple accounts, each with its own unique IP address. By doing this, the attacker can gain a disproportionate amount of power within the network or system.
A 51% attack is a type of double-spending attack in which an attacker controls more than 50% of the network’s mining hash rate or computing power.
The attacker can use their majority control to manipulate the blockchain in various ways, such as blocking other users from completing transactions, double spending coins, or preventing new blocks from being added to the chain. 51% attacks are one of the most serious threats to public blockchain networks.
Cryptos Most Vulnerable to Attacks
Vampires are an age-old problem, and they’re definitely not limited to the crypto sphere. However, in the world of cryptocurrency, vampires can wreak havoc on digital assets and undermine faith in the system as a whole.
In short, a vampire attack is when someone with malicious intent manages to take control of a large number of cryptocurrency units and then sells them all at once on an exchange, causing the price to plummet.
These attacks can be devastating to both investors and the crypto community as a whole. Not only do they cause financial losses, but they also damage confidence in the system.
So which cryptos are most vulnerable to vampire attacks? Check out these three:
- Bitcoin: Bitcoin is the original cryptocurrency, and it’s still by far the most popular. That means it’s also the biggest target for vampires in the crypto world. We’ve witnessed several major attacks on Bitcoin exchanges over the years that have caused prices to crash.
- Ethereum: Ethereum is another major target for vampires due to its popularity and high market capitalization. We’ve seen a number of successful vampire attacks on Ethereum exchanges, often resulting in prices falling by double digits in a matter of minutes or hours.
- Litecoin: Litecoin is another top crypto that’s often targeted by vampires. One recent example was an attack on Binance that resulted in prices briefly falling from around $140 to under $100.
Eliminating Your Exposure to Attacks Even More
The best way to protect yourself from vampire attacks is to eliminate your exposure to them. Here are some tips:
- Invest in a hardware wallet like a Trezor or Ledger Nano S. This will ensure that your private keys are offline and not susceptible to hacking.
- Avoid keeping large amounts of crypto on exchanges. Exchanges are hot targets for hackers because they hold such a large amount of value in one place. If you must keep crypto on an exchange, spread it out among different exchanges to minimize your risk.
- Be careful of phishing attacks. These are when scammers send you fake emails or messages that look like they’re from a legitimate website or service in an attempt to steal your login information. Always check the URL of websites carefully and never click on links sent to you by email or message unless you’re absolutely sure they’re legitimate.
By following these tips, you can greatly reduce your exposure to vampire attacks on crypto and other types of crypto scams.
On the other hand, there are a few things you can do to avoid being attacked by vampires in the crypto world:
- First and foremost, be aware of who you’re dealing with. If someone seems untrustworthy, it’s probably best to steer clear.
- Secondly, don’t keep all your eggs in one basket. Diversify your holdings across different wallets and exchanges so that if one is compromised, you don’t lose everything.
- Thirdly, always have a backup plan. Keep a backup of your private keys offline in a safe place so that if your primary storage is attacked, you can still access your funds.
Following these tips should help you avoid being attacked by vampires in the crypto world. Having said that, it’s advisable to always plan for the worst while hoping for the best!
Since your investments are usually long-term, it’s better to be prepared well in advance. And talking about being prepared, it’s important to track your own personal tax report on your crypto investments as well. And what better way than to start right here at KoinX and gather all your tax reports in a single place?