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Cryptocurrency Security Breaches Drop in 2023, Yet Still Exceed $1.8 Billion Losses

CertiK, a blockchain security firm, disclosed that 2023 witnessed a substantial decline of 51% in cryptocurrency losses due to hacks, scams, and exploits compared to the preceding year. However, the industry still incurred significant losses, with a staggering $1.84 billion lost across 751 security breaches in 2023, as highlighted in the “Hack3d” report published by CertiK.

While the decrease from 2022 is notable, analysts at CertiK emphasized that the remaining $1.8 billion loss remains a significant concern within the industry.

The report detailed that the third quarter of 2023 accounted for the highest losses, tallying up to $686,558,472 from 183 hacks and scams. Additionally, November stood out as the most costly month of the year in terms of security breaches.

A critical factor contributing to these breaches was the compromise of private keys, responsible for several high-value security incidents.

“Six of the ten most costly security incidents in 2023 resulted from private key compromises,” the report highlighted.

Even though compromises of private keys represented only 6.3% of all security breaches, they led to approximately $880,892,924 in cryptocurrency losses across 47 incidents.

In light of these breaches, CertiK recommended various best practices for private key management, including the use of multi-signature wallets, hardware wallets, access control policies, encrypted storage, and regular monitoring of private key usage.

The report also underscored an emerging trend in 2023: the adoption of “retroactive bug bounties,” with $219 million returned across 36 events. Notably, this represented around 12% of the total losses, showcasing a proactive approach by some protocols in retrieving stolen funds.

CertiK’s co-founder, Ronghui Gu, expressed optimism about blockchain security in 2024, attributing it to the growth of bug bounty platforms and proactive security measures. Gu hoped for continued decline in losses throughout the year.

However, analysts cautioned that the industry’s security would face a substantial test during a crypto bull market. They emphasized the need to reduce the correlation between the total value locked (TVL) and losses due to hacks and scams, aiming for a balance between innovation and strengthened security measures.

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