August 15, 2022

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4 issues to be taught from the embarrassing Slope hack on Solana

Now we all know: The hack that drained 1000’s of consumer wallets (greater than 8,000...

Now we all know: The hack that drained 1000’s of consumer wallets (greater than 8,000 at writing time) on cryptocurrency platform Solana wasn’t a consequence some form of wide-ranging system failure. It was very possible as a result of egregiously unhealthy safety practices by cryptocurrency pockets supplier Slope.

In response to safety firm Otter, the hack was as a result of Slope sending customers’ seed phrases in plaintext to a centralized server. A seed phrase is an equal to a crypto non-public key; it is a string of phrases that “unlock” the funds in a crypto pockets, permitting whoever owns the phrase to do with them no matter they please. “Plaintext” implies that these phrases had been despatched over the web unencrypted, making them a straightforward goal for hackers.

In short: Slope did something that no company should ever, ever do, and it cost its users more than US$4 million. (For the record, Slope said in an official assertion that “nothing is but agency” concerning the hack, however several different experts agree with Otter.)

The quantity is not huge on this planet of cryptocurrencies, the place multi-million hacks are commonplace. However the hack was the stuff of nightmares for crypto customers, as folks’s funds simply began randomly disappearing from their wallets, and it took practically a day for safety consultants to catch up and determine what had occurred.

So what are you able to do to ensure such occasions do not have an effect on you sooner or later? No technique is foolproof, however here is some recommendation.

1. Software program cryptocurrency wallets may be ridiculously unhealthy in terms of safety

One would assume that an organization specializing in crypto wallets would not even ship emoji unencrypted, however one can be fallacious. Slope seems to have dedicated one of many worst offenses potential by sending customers’ seed phrases unencrypted over the web.

The lesson to learn here is this: Even when a company is saying security is a priority; even when it’s operating in a space where security is extremely important; even when they pinky swear your funds are safe, you must still remain vigilant.

2. All the cryptography in the world doesn’t help when there’s a weak link

When you set up a crypto wallet, you’ll typically get messages saying you should keep your seed phrase and private key safe and not show it to anyone. You may also see notices that there’s advanced cryptography at work here, and if you lose both your seed phrase and access to your private key, you’ll never be able to get your funds back.

While that may be true in some cases, if the wallet itself mishandles your seed phrase, the most advanced cryptographic safeguards will be of little use.

3. Use a hardware wallet if possible

Ledger offers a hardware wallet that works with Solana.

A hardware cryptocurrency wallet is a device, often similar to a USB stick, that lets you keep, spend and receive crypto coins. It typically offers more security than a software wallet, though it’s a little more complicated to use.

When the Slope attack started hitting user wallets, both Solana and Slope advised users to transfer their funds to a hardware wallet. That’s good advice in principle, but most users don’t have a hardware wallet handy, and ordering one online and receiving it typically takes a few days.

So one thing you can do, especially if you’re handling meaningful amounts of crypto, is to order a hardware wallet before disaster hits. Companies like Trezor and Ledger supply one. Do keep in mind, although, that even {hardware} wallets can have safety holes, and the businesses that make them can have unhealthy safety practices. For instance, Ledger had a horrible information leak through which hackers bought a maintain of its customers’ names, house addresses and different information. However, Trezor, which has a very good safety document, doesn’t assist Solana as of this writing.

4. Generally, a centralized alternate can prevent

In crypto, there is a saying: Not your keys, not your cash. It implies that for those who preserve your cash with a 3rd occasion, such a centralized crypto alternate, you do not actually management what occurs to them.

However within the case of yesterday’s Slope hack, one of the best factor you could possibly do to guard your cash (if you did not have entry to a {hardware} pockets) was to ship them to an alternate corresponding to FTX or Binance, because it was unlikely that these exchanges had been additionally affected by the identical challenge. As a fast security measure, it was an honest choice; you could possibly all the time transfer your cash elsewhere after the mud settled.

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