North Korea is experiencing hardship after the crypto crash wiped off millions from its stash of stolen digital assets. Reuters reported on June 29, citing four digital investigators. According to the investigators, the bear market threatens a key funding source for Pyongyang and its weapons programs. Allegedly, North Korea has invested heavily in sophisticated crypto hacking groups over the years. As a result, the country has become a significant threat, successfully orchestrating multiple high-profile attacks on the crypto space. An…
The replay technique is among the many attacks that have made hackers rich over the years. The phenomenon was born before the invention of cryptocurrencies and has grown in recent years.
This article will deal with various aspects related to the topic. First of all, it will be helpful to understand how a typical replay cyber attack works. Secondly, we will focus on how a criminal can use this technique in the crypto world.
There are several user protection techniques, and every reader must be familiar with them.
Replay attacks before cryptocurrencies invention
The general concept of a replay cyberattack is relatively straightforward. For example, imagine a group of criminals discovering the credit card information of a bank’s customers. At this point, hackers can easily carry out operations online.
Today, all banks allow you to block a cloned credit card very easily. Regardless, customers typically record a few unauthorized suspicious expenses before freezing the card.
The most attentive customers can proceed to block the payment method quickly. However, these hackers succeed thanks to customers who are slower to identify the scam. For this reason, a replay attack usually targets a large number of users.
Another form of replay attack involves the theft of a password. How many of us have saved our credit card information on e-commerce portals? Hackers can use this mechanism to make purchases with our payment methods.
The concept of “hard forks” in the blockchain industry
It is time to introduce a popular concept into the blockchain universe. Experts speak of a “hard fork” when a chain splits into two components.
What happens, in this case, is that one side keeps the original protocol of the blockchain. However, the other adopts a different protocol, with several technical differences.
These divisions occur because those who own cryptocurrencies have governance rights over the system. Shared governance leads to internal discussions on various issues. In practice, users can vote on the new technical changes to the blockchain.
In some cases, users may deviate from the original cryptocurrency infrastructure. Therefore, we speak of a hard fork in the sector precisely.
Over the years, the market has seen many cases of hard forks. The one customarily mentioned is the birth of Bitcoin Cash (BCH), with a split from Bitcoin (BTC). However, not everyone knows that BCH also had its hard fork with the advent of Bitcoin SV (BSV).
The internal clash between developers is often very evident during a hard fork. Each of the above systems claims to be “the original Bitcoin“.
How can a hacker exploit hard forks in crypto?
The reason we considered it essential to explain the hard fork concept to the reader is related to the behavior of hackers. A criminal can find opportunities to break into the blockchain system during these splits.
As always, a practical example can help us better understand the whole flow. Let’s imagine that a group of CoinA developers leads to the birth of CoinB through a hard fork. From the point of view of a CoinA holder, we have the following scenario:
- Assuming that the investor has 100 CoinA, he would keep this amount in his wallet
- At the same time, the system would award him 100 CoinB
The perfect opportunity for a hacker in this situation arises when the holder spends only one of these tokens. If the investor pays 100 CoinA, he uses his digital signature to approve the transaction.
A hacker with good technical skills can find this digital signature, which generally would not have much value. However, in the particular case of a hard fork, this information takes on enormous importance.
The hacker can replicate the approval passage of CoinA on the same quantity of CoinB. An important detail is that the digital signature must work with the same wallets (sender and receiver).
Therefore, it is clear that the hacker must skillfully find a way to receive the first amount of 100 CoinA on a wallet owned by him. Only in this way will it be possible to replicate the transaction with the same amount of CoinB, making a personal profit.
When a hard fork occurs, blockchains typically recommend not making crypto transactions. This simple countermeasure seems to be the simplest method to avoid replay cyber attacks.
Of course, the no-transaction recommendation is provisional. Usually, a blockchain is able, following the hard fork, to protect its infrastructure from these attacks.
The first days following the hard fork represent the moment of highest vulnerability in the system. The problem is that hackers are aware of this tendency.
Other user protection tools consist of blocking cryptocurrencies of the new blockchain. In addition, many systems allow you to block wallet transactions temporarily.
While stealing credit card information or a password is a popular scam technique, we discover new vulnerabilities in the blockchain world. For example, nobody thought about the digital signature problem when the first hard forks happened.
The growing blockchain maturity leads customers and suppliers to have a greater awareness of the risk of fraud. Future hackers will need to be more creative to succeed in their scams.