Every active participant in the Crypto industry would have come across the word “hacking”. The ultimate purpose of blockchain technology was to prevent thefts, malware attacks, or any kind of hacks. However, there are a few cases where hackers took advantage of the vulnerability present in exchanges. This is where entrepreneurs need to be smart before starting a Crypto exchange.
Additionally, it is crucial to understand the common ways hackers pierce into a platform. Many entrepreneurs have wrongly assumed that since blockchain technology is involved, the exchange is unlikely to be hacked. At last, the exchange is also a website platform like other websites. Hence, to be on the safer side, including sufficient protections against any kind of spam, virus or attack is essential for the exchange to withstand long.
Our blockchain experts at Coinsclone have thoroughly analyzed and brought an answer to how to build a hack-free exchange. We have also focussed on hacking case studies and how to prevent them going forward. Before that here is a small overview of what is a Crypto exchange.
What is a Cryptocurrency Exchange?
Cryptocurrency Exchanges are trading platforms for users who wish to buy, sell, or trade Cryptocurrencies conveniently. These exchanges have numerous ways to make revenue. As a result, most startups create Crypto exchanges without second thoughts. However, it’s crucial to include the best security features and test the platform thoroughly before beginning the business.
Why Including Top Security is Important in Crypto Exchanges?
Incorporating high-grade security features during the cryptocurrency exchange development phase is an easy way to resist hack attacks. The reason we stress building a secure or non-hackable exchange is the trust factor. Users surge towards non-hackable exchanges in extraordinary numbers from time to time. Will the same amount of trust prevail after a hack has taken place in the exchange? Probably not and this could lead to substantial loss in the business.
Secondly, a significant question mark will arise against blockchain technology in society. Although it is almost impossible to alter transaction data in blockchain, a small loophole might be enough for hackers. Especially, during a fork, when a community makes a change to the blockchain protocol and splits an existing chain into two directions, security could be at risk.
With digital currency regarded as the future, it is essential for users to maintain trust in blockchain or Cryptocurrencies. To understand how security can be maximized, let’s discuss a few case studies of hacking in the blockchain industry.
Case Studies of Hacking in the Blockchain Industry
According to a study, over $20 million was stolen in 2022 by hackers. Crypto exchange hacking started in 2011 with Mt.Gox being the first exchange to experience such activities. Here are other big exchanges that faced hacking issues.
FTX, one of the largest Crypto exchanges previously went bankrupt in 2022. More than $470 million were stolen from the Crypto wallet by hackers. The FTX telegram channel informed the users not to visit the site speculating the website might download trojans. Despite Binance trying to bail FTX out of the difficult situation, the mishandling of customer assets left a major hole, and liquidity issues also popped up.
Coincheck, a giant exchange in the Crypto industry suffered a huge setback in 2018. The exchange was hacked and more than $500 million was stolen. The primary reason behind the hack was the usage of hot wallets. The exchange, however, fought back through the tough circumstances and is slowly redeeming itself in the market.
BitMart, a centralized exchange in 2022 saw hackers withdrawing about $200 million from the wallets. The problem that arose was the private key which opened up two hot wallets. The Exchange CEO later promised to reimburse the victims due to the malware attack. It turned out to be one of the largest hacks in a Crypto exchange and is still discussed.
If you have noticed one common problem that seems to keep repeating in these exchanges is the hot wallet facility. Also, if the security was at its best during the development phase, such malware activities could be easily prevented. Hence, it is important to know what security features need to be included in the non-hackable exchange to ensure safety.
Security Features that Needed to be Included in a Crypto Exchange
While the security feature might differ from business to business, a Crypto exchange needs to have upgraded security mandatorily. Compensating on security could result in a risky situation. Here are those security features that could help to build a non-hackable exchange.
HTTP (Hypertext Transfer Protocol) basic authentication is the primary step to securing your exchange platform. The server requests authentication information which could be a user ID or password or both at times from the users before entering the exchange.
Most users would have come across this feature in WhatsApp. End-to-end encryption is a way to secure communication between two users and prevent third parties from accessing data. Even, Google cannot view these messages as people with access to the endpoint devices can only read them.
Data encryption protects digital data confidentiality by converting plain text into unreadable digitally coded cipher text. Only the sender can read the text during encryption. For the receiver to read, the data needs to be decrypted which converts the coded cipher text into plain text.
Two-factor authentication helps to reduce the risks associated with compromised passwords. When one password is hacked, second-factor approval ensures the assets are still safe. This means that the exchange entry is allowed only when both identifiers are approved from different ends.
SQL Injection Prevention
SQL (Structured Query Language) injection is a code injection used by hackers to read and access data from a database. It is usually adopted and deployed through website APIs. Preventing SQL injection is possible through parameterized database queries with bound, typed parameters and careful use of parameterized stored procedures in the database.
Cross-Site Request Forgery (CSRF) Protection
Server-Side Request Forgery (SSRF) Protection
According to the SSRF attack, it can grant the hacker access to restricted services and internal actions. Here, the hacker attacks the server functionality to alter the resources. Data imports from URLs are usually targeted by the hacker. This can be protected by disabling unused URL schemas.
Anti-Denial Of Service (DoS)
A Denial of service attack is carried out when a hacker prevents from accessing the components on the website. Network segmentation into smaller manageable pieces can help prevent such DOS attacks. Through Anti-DOS, users can safely visit the platform without any discrepancies.
Anti-Distributed Denial Of Service(DDoS)
Anti-DDOS prevents a hacker from attacking many systems to launch an attack against a remote host simultaneously. DDOS attack poses a severe threat to the security systems on the website. By creating a physical layer of protection against hackers and networks, the DDoS attack can be prevented.
How Our Clone Scripts Can Solve the Problem?
Since major Crypto exchanges have also faced hacking issues at times, we have found the vulnerable areas that need improvement. Our one-stop solution to develop Crypto exchanges, named Clone Scripts has been designed with packed security features. Additionally, it can customized according to entrepreneurs’s wishes and is readily available.
Despite being able to solve a number of problems, our Clone script cost is quite affordable in the market. The primary reason for such a budget-friendly price is that the clone scripts have been multi-tested and pre-fabricated. If you compare the cost of a clone script with the usual development from scratch, the difference is quite big. In fact, you can develop an exchange within just 7 to 14 days with the help of clone scripts.
In real-time, hackers will always find ways to pierce into exchanges. It is the duty of startups and entrepreneurs to be one step ahead of attackers by incorporating the best security features in their exchange. Luckily, with the introduction of clone scripts, entrepreneurs can feel safe and build their exchange in the best way possible. Join hands with Coinsclone to experience a fantastic non-hackable exchange with the highest safety measures.