Can Users Protect Their Digital Identity and Assets From Crypto Hackers?

Crypto Money Laundering on the Rise as per Recent Report

The latest BadgerDAO hack is a call for crypto investors to protect their digital identities and personal information better. Is there a solution to the major hacking crimes being witnessed in crypto every other day?

Last week, BadgerDAO, a borrowing, lending, and yield earning platform of tokenized Bitcoin, announced their protocol was hacked by anonymous hackers. The unknown hackers stole about 2,100 BTC (~$118.5 million) and 151 ETH ($679,000) worth of cryptocurrency tokens, bringing the platform’s services to a complete halt. 

According to reports, the hackers were able to steal an API key from BadgerDAO that gave them control over BadgerDAO’s account on Cloudflare, the project’s content delivery network for its site. Once in control of the API keys, the hackers injected a malicious script on the site prompting users to give up wallet permissions, allowing them to drain funds from the users’ wallets. 

According to Peckshield, a blockchain security firm that first noticed the hack, one party (now discovered to be Celcius Network) lost over $50 million in the hack. Despite the team from BadgerDAO pleading with the hackers to return the funds stolen, none of the tokens have been recovered. 

So far in 2021, the BadgerDAO hack ranks as the third-largest hack in the DeFi space, behind the PolyNetwork hack ($600 million) and Cream Finance in October ($130 million), which faced three separate attacks in the past year.  Other major attacks include Liquid ($94 million), EasyFi ($81 million), bZx exchange ($55 million), and Uranium Finance ($50 million). 

However, the hackers did not only infiltrate protocols to steal cryptocurrency tokens but also personal data and users logins. According to SelfKey, a blockchain-based identity solution provider, a total of 510,000 crypto user logins were compromised in 2019, with the number expected to have grown in 2021. 

In November, nearly 6,000 users on Coinbase, the largest U.S.-based crypto exchange, complained that their accounts were drained after unauthorized hackers gained access to their logins and accounts. According to Coinbase, the hackers exploited a flaw in the company’s SMS account recovery process to gain access to the accounts. 

Identity theft is one of the leading causes of crypto users losing their funds to hackers. Normally, hackers access the user’s email address, passwords, and phone numbers linked to their accounts, making it easier to log in to their accounts and steal funds. However, this could be a thing of the past as new blockchain-based technologies protect users’ personal and identity information to ensure only verified personnel have access to any accounts. 

Blockchain Solution to Rampant Digital Identity Theft

As alluded to, crypto users need to be more protective of their personal information and identities to avoid it being exploited by hackers or other bad actors. Blockchain developers are finally fighting off hackers by finding solutions that protect users from digital identity theft and exploitation of personal data. The whole idea is to give more control and management of personal data to the individual to avoid mass loss of data when a centralized entity is hacked. 

One such project is PhotoChromic, which enables people to securely own and verify their digital identity and personal information via the use of non-fungible tokens, or NFTs. The tokenized NFTs can be programmable, are universally addressable, multichain, and can be tuned for additional functionality.

Simply put, PhotoChromic takes all of your personal information including biometric proof of life, government-issued documents, and unique physical attributes, and creates an NFT using the information. The digital asset can be utilized to unlock your accounts on DeFi protocols, Web3 applications, and any other platforms. 

The platform ensures the user has complete control and independent management of their online identity which is secured on a blockchain. The platform leverages blockchains’ immutable security to ensure no data is lost on the platform. Users also benefit from the attestation of true biometric identity that is tethered to their physical and digital assets meaning no one can access the assets apart from the owner. Finally, the platform runs on multiple blockchains including Polygon (MATIC), Ethereum, and Cardano allowing users to easily transfer their assets to any platform they wish. 

Protecting Platforms From Hacks?

The platform targets reducing the cases of identity hacks and theft in every corporation across all industries. The PhotoChromic protocol allows users to mint a biometric, non-transferable NFT that lives in their wallet like any other NFT, with generative artwork seeded by their face that they recognize.

Starting with centralized entities such as Coinbase, PhotoChromic will help in securing digital identities via introducing biometric log-in systems built on a blockchain. This will strengthen the two-factor authentication process making it harder for hackers to gain access to users’ accounts. Decentralized applications will also benefit from PhotoChromic non-custodial security systems as users can simply log in to any application using their Ethereum wallet and validate their digital identities.

The platform also includes algorithmic generative art to create NFTs that use a person’s passport image, obtained when inputting your identification, and certain variables to create a unique and expressive image. Labeled, Photosapiens, the platform allows a user to reveal the generative artwork to people they trust, together with certain credentials they choose to sign in a contract for a period of time. The control and ownership of the generative art remain fully with the owner, who also maintains and manages how it is distributed and shown to the world. 

Protecting Your Funds From Hackers

Protecting our own digital identities provides a crucial solution to the ever-growing problem of hackers. However, this is not the final piece of the puzzle. To avoid funds being hacked, users should try to keep their crypto tokens off centralized exchanges, enable two-factor authentication and use biometric solutions whenever necessary. Additionally, conduct due diligence on any platform before depositing your funds to avoid scams or phishing from hackers. 

Finally, the recent BadgerDAO hack has shown that hackers in crypto are not going away anytime soon. With blockchain solutions being created to protect digital identity, blockchain apps and crypto exchanges will be more secure in the long run. Crypto investors need to be prepared to deal with and mitigate the risks associated with hacking. 

A dedicated writer who shows her interest in writing all sorts of content about the cryptocurrency market in NewsCrypto. She is an enthusiastic reader and writer with passion for sharing crypto news and trends.