Just like every other big financial industry, Cryptocurrency has both upsides and potential risks and this is why it's important to learn as much as possible about things that could affect you. There are people who seek to exploit the system and they come up with different ways to do this. One of the ways in which these crypto racketeers exploit the system is through something called address poisoning. It is a type of attack that preys on newbies who are unfamiliar with security protocols.
In this guide, we'll cover what address poisoning is, how it works, why it poses a threat to you and how you can identify these attacks.
What is an Address Poisoning Attack?
Address poisoning is a type of crypto scam where hackers compromise your wallet by sending fake tokens or tiny bits of real tokens to your wallet from an address that is almost identical to yours. The wallet address on wallets and exchanges are not shown fully and these hackers are aware of this, so they create an address that contains the first and last characters of your own address.
The purpose of this is to confuse unaware people into sending their assets to the scammer's wallet instead of the intended address in future trades. Since the addresses are saved in your transaction history, it is very easy to fall victim to this trick when making a transaction.
How Do Address Poisoning Attacks Work?
Knowing how address poisoning works is the first step to identifying it and preventing yourself from falling victim to this scam, so we'll go through the methods that attackers use to carry out this attack. The most common ways are through fake contracts and breadcrumbing:
● Breadcrumbing
The first step attackers take while using this method is to create a new wallet that is almost identical to your own wallet address. They only need to change a few characters from the original address to this, then after that, they send you a small amount of any crypto token from the fake address to yours with the hope that you will check the transaction history. The trick here is that when you see this, you might copy the address and use it for future transactions thinking it's yours.
● Fake Contracts
Another method hackers use for address poisoning is fake contracts. They create a smart contract then send tokens with no real value to the victims address. The trick here remains the same; to get the victim to copy the attacker's address from their transaction history in future transactions and unintentionally send their assets to them instead of their trade partners.
Why are Crypto Newbies More Liable To Address Poisoning?
Being a newbie in any field means you still have a lot to learn and don't fully understand many things yet. This is true for cryptocurrency as well and this is why it's important to make research like this to broaden your perspective. There are various reasons why newbies are more prone to these attacks:
● Newbies may be unfamiliar with how wallet addresses work and may not understand how important it is to scrutinize transactions before approving them.
● Many users find it easier to copy addresses from transaction history rather than doing things manually and this makes it easier to copy a phishing address while making transactions.
● A lot of users also have a strong belief that crypto transactions are always secure, causing them to neglect caution. Blockchain transactions are usually safe and protected, but it's also very important to be vigilant.
All these are what make newbies the prime target for attackers.
How to Identify Address Poisoning Attacks
Address poisoning attacks are usually similar, so it's easy to identify this type of fraud once you know what it entails and how it is carried out.
● Address poisoning attacks usually cost the orchestrators money, especially when they use the breadcrumbing method. This is why they usually send insignificant amounts like a few cents to the victim's address. If you notice a transaction of a very small amount in your transaction history, it could be a sign that your address is poisoned.
● Keep track of the addresses you often make trades with and check your transaction history carefully. If you notice an address that's similar to yours, then it is most likely created by an attacker.
● If you notice multiple transactions with small amounts which you had no prior knowledge of, it could be a sign that someone is trying to carry out an address poisoning attack on your wallet.
● Verify wallet address before making transactions. It's easy to just look at the first and last characters of an address because they're usually long, but this could be dangerous as attackers usually rely on this to carry out their attacks.
How to Protect Yourself From Address Poisoning Attacks
Addressing poisoning may not take a lot away from attackers, but for the victims, the consequences of falling for this scam could be grave and this is why it's important to take extra measures to protect yourself.
● It is tempting and easier to just go to your transaction history to copy wallet addresses, but this is not advisable as it could make you fall victim to address poisoning. Instead, you should always verify addresses you're sending your assets or create a list if you have addresses who you have repeat trades with.
● It is also important to double-check every wallet address you're making a transaction with because missing a few or even a single character could divert your funds to another address and recovering your asset after making this mistake is impossible.
● Some wallets come with a whitelist feature which allows you to add addresses you regularly make transactions with to a list. This eliminates the chances of sending your tokens to a phishing address.
● Many wallets now have a contact list option that allows you to add addresses you regularly make trades with to your contact list. This protects you from sending funds to an address which you have mistaken as yours. Turn on this feature if available.
Conclusion
Address poisoning may seem like a trivial issue which can be easily curbed, but they're dangerous and can lead to huge losses if you're not careful. As a newbie in the crypto space, it's important that you take extra measures to secure your wallet and verify all details before completing your transactions.
By following the steps highlighted in this guide, you can reduce your chances of falling victim to address poisoning and other cryptocurrency scams.
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