Blockchain Security

Cybersecurity For Initial Coin Offering

CyStack Avatar

CyStack Editor

Content Executive @ Marketing Team|April 5, 2023
Security for ICO is important

Nowadays, more and more companies raise funds through an Initial Coin Offering (ICO). By launching an ICO, a company can create a new coin to make money. In addition to Bitcoin, Ethereum, and Litecoin, there are a large number of other coins in the market. However, companies might face security challenges when using cryptocurrency and launching ICO.

The following are some steps that companies should take careful consideration in a coin life cycle:

  • Coin offering: Hackers can attack offering websites to modify provided services.
  • Coin trading: DDoS attacks make cryptocurrency websites or applications unavailable to investors.
  • Currency exchanges: When trading currencies, an investor is likely to face risks of DDoS attacks or account takeover attacks.
  • Wallet: It is used to archive, receive and send crypto coins. Therefore, it is a lucrative target of malicious hackers.

Let’s learn about some aspects of a cryptocurrency attack and how to protect your assets against these attacks.

What is ICO? 

When launching an ICO, a company will create a new cryptocurrency and sell it to investors to receive money or another cryptocurrency, usually Bitcoin or Ether. Investors can use these cryptocurrencies to pay for services provided by this company or create transactions.

ICO is similar to crowdfunding because it is available for every investor without too many regulations. Companies can raise a lot of money through an ICO, for example, Blockchain Filecoin raised over 250 million dollars through ICO.

New cryptocurrency published in an existing platform like Ethereum, following ERC-20 standard, does not require a firm knowledge of the underlying blockchain technology of cryptocurrency.

ICO attack

Blockchain technology vulnerabilities

Since cryptocurrency was first introduced,  it has brought high interest and value to investors. Therefore, more and more hackers are interested in exploiting the vulnerabilities of this market. Although blockchain technology is decentralized and immutable, many vulnerabilities are still found and exploited.

Blockchain technology still has many vulnerabilities targeted by hackers

Direct attack

A typical example of direct attacks is an attack on the ICO of CoinDash – a start-up working in cryptocurrency portfolio management and related services.

According to the CoinDash blog, when the contract’s address provided by Ethereum was public, the attacker changed the official address to an incognito address. Due to high demand at that time, around 43,000 Ether was redirected to the incognito account within only 7 minutes. The website was shut down immediately as soon as it was found hacked. The attack caused a loss of about 7 million USD. Finally, it is defended against the attacker by the web application firewall.

Another example is a DDoS attack on the Bitcoin Gold website when it was introduced to the market. The attack made the website unavailable for a while. Although this did not directly affect the coin, it damaged the credibility of the whole project.

Account attack

Electroneum – a cryptocurrency provider – informed about a delay of their website and application due to a DDoS attack. 140,000 investors could not access their accounts and their cards were frozen. Finally, it was protected by using DDoS security.

E-wallet is easily attacked

How to protect your cryptocurrency

Web application firewall

Web Application Firewall (WAF) introduced by Gartner is a leading web application for four years continuously. It analyzes users accessing your website to protect your website from attacks. WAF can defend against web attacks including OWASP, which is one of the top 10 security threats and malicious bots. It controls the client accessing your application with a traffic filter based on different factors.

WAF analyzes all aspects of your website to detect attacks, which will keep your website away from authentication requests such as CAPTCHA.

Comprehensive security platform

After safely introducing your crypto coin, you should be aware of vulnerabilities that might be exploited through a cryptocurrency life cycle, including DDoS, cryptocurrency trade, and e-wallet. We will do more research on this problem and provide you with suitable solutions soon.

Use CyStack Platform to discover security vulnerabilities timely to prevent your cryptocurrency exchanges from attacks.

Related posts

Advantages and Disadvantages of Smart Contracts in Blockchain
Advantages and Disadvantages of Smart Contracts in Blockchain
March 24 2023|Blockchain Security

Advantages and disadvantages of smart contracts – do you want to learn more about the two sides of this hot blockchain technology? Smart contracts are the heart of the hotcake blockchain, whose long-live has been confirmed for decades; the greatly exaggerated death of crypto exposes significant limitations of the blockchain and the core smart contracts. …

How To Perform A Smart Contract Audit
How To Perform A Smart Contract Audit
March 24 2023|Blockchain Security

Smart contracts are complex programs, and as a result, it is hard to get security right. This can be a problem when huge amounts of assets are attached to them on blockchains. In addition to financial loss, security flaws can erode the reputation of the affected platforms and vendors. Experienced experts can offer additional assistance …

Security In Web3: How Does It Differ From Web 2.0 Security?
Security In Web3: How Does It Differ From Web 2.0 Security?
March 24 2023|Blockchain Security

Web 3.0 advocates promise a massive improvement in security for users. Most of it comes from blockchain technology’s resistance to human intervention. In general, transactions are irreversible, and users enjoy their anonymity. That said, we have still observed some similar cybersecurity trends between Web 2.0 and Web 3.0. A whole new iteration of the internet …