Security & Forensics

A 51% attack occurs when a single entity or coordinated group acquires control of more than 50% of a Proof-of-Work blockchain's total mining hash rate — or, in Proof-of-Stake systems, more than 50% of staked validator weight. With majority control, the attacker can reorganize the canonical chain, reverse their own previously confirmed transactions (enabling double-spends), and selectively censor new transactions from being included in blocks. Critically, a 51% attacker cannot steal funds from arbitrary wallets, forge digital signatures, or unilaterally alter the protocol's consensus rules.

Address poisoning is an attack in which a malicious actor sends a zero-value or dust transaction to a target wallet from an address that closely resembles one the target has previously interacted with — differing only in a few characters at the beginning or end of the address string. The goal is to pollute the target's transaction history so that, when the target next copies an address from their history for a future transaction, they inadvertently copy the attacker's lookalike address instead of the intended recipient's. The attack exploits the common user behavior of copying addresses from transaction history rather than from a verified source.

A cold wallet (or cold storage) is a cryptocurrency key management solution in which the private keys are generated and stored on a device or medium that has never been connected to the internet or any networked system. By maintaining an air gap between the signing environment and any network-accessible system, cold wallets eliminate the primary attack surface exploited in remote theft: network-based key exfiltration. Common implementations include hardware wallets (dedicated signing devices such as Ledger and Trezor), paper wallets, and air-gapped computers running offline signing software.

A cryptographic hash function is a deterministic mathematical algorithm that maps an input of arbitrary length to a fixed-length output — called a digest or hash — satisfying four critical security properties: (1) Pre-image resistance: given a hash output, it is computationally infeasible to recover the original input; (2) Second pre-image resistance: given an input, it is infeasible to find a different input producing the same hash; (3) Collision resistance: it is infeasible to find any two distinct inputs that produce the same hash output; (4) Avalanche effect: a single-bit change in the input produces a radically different output. These properties underpin the integrity guarantees of blockchain data structures, digital signatures, and Merkle trees.

A double-spend attack is an attempt to spend the same cryptocurrency funds more than once by exploiting the latency between transaction broadcast and final confirmation. An attacker broadcasts a transaction to a merchant, receives goods or services, then simultaneously or subsequently broadcasts a conflicting transaction returning the same funds to themselves — and uses superior hash power or network manipulation to ensure the fraudulent transaction is confirmed in the canonical chain while the merchant's transaction is orphaned. The prevention of double-spending without a central authority was the foundational problem solved by Satoshi Nakamoto's Bitcoin whitepaper (2008).

An eclipse attack is a network-layer attack in which an adversary monopolizes all of a target node's peer connections by flooding the node's peer table with attacker-controlled IP addresses, effectively isolating it from the honest network. The eclipsed node receives a manipulated view of the blockchain — controlled entirely by the attacker — and can be deceived into accepting a fraudulent chain, double-spend transactions, or be exploited as a stepping stone for further attacks such as selfish mining facilitation, transaction censorship, or routing attacks against payment channel networks.

A flash loan attack is an exploit unique to decentralized finance (DeFi) in which an attacker borrows a large, uncollateralized sum of cryptocurrency via a flash loan — a loan that must be borrowed and repaid within a single atomic transaction — and uses the temporarily acquired capital to manipulate on-chain price oracles, drain liquidity pools, or exploit arithmetic vulnerabilities in smart contracts, before repaying the loan in the same transaction. Because the entire sequence executes atomically, the attacker requires no upfront capital beyond gas fees. If any step in the sequence fails, the entire transaction reverts, including the loan repayment obligation.

A hot wallet is a cryptocurrency wallet whose private keys are stored on a device or system that maintains an active internet connection. Hot wallets offer superior operational convenience — enabling rapid transaction signing and real-time access to funds — at the cost of a significantly expanded attack surface relative to cold storage. They are the standard operational tool for exchanges, DeFi protocols, and active traders who require frequent transaction capability. The term encompasses software wallets (desktop, mobile, browser extension), exchange custodial wallets, and web-based wallets.

A multi-signature (multisig) scheme is a cryptographic access control mechanism requiring that a transaction be authorized by a minimum threshold of m private keys out of a total set of n designated keys (expressed as an m-of-n scheme) before it can be broadcast and confirmed on the blockchain. For example, a 2-of-3 multisig wallet requires any two of three designated key holders to sign a transaction. This architecture eliminates single points of failure in key management, distributes trust across multiple parties or devices, and provides a foundation for institutional custody, DAO treasuries, escrow arrangements, and corporate treasury management.

Phishing in the cryptocurrency context is a category of social engineering attack in which a malicious actor impersonates a legitimate entity — such as a wallet provider, exchange, DeFi protocol, or support representative — to deceive a target into voluntarily disclosing private keys, seed phrases, login credentials, or signing malicious transactions. Crypto-specific phishing variants include: seed phrase phishing (fake wallet recovery pages), approval phishing (tricking users into signing unlimited ERC-20 token approval transactions), address poisoning (inserting lookalike addresses into transaction history), ice phishing (manipulating smart contract call data to redirect asset transfers), and wallet drainer-as-a-service kits deployed via compromised NFT project websites.

A private key is a large, randomly generated integer — typically 256 bits in length — that serves as the secret component of an asymmetric cryptographic key pair. In elliptic curve cryptography (ECC) as used by Bitcoin and Ethereum (secp256k1 curve), the private key is used to generate a corresponding public key via scalar multiplication on the elliptic curve — a one-way operation that makes deriving the private key from the public key computationally infeasible with any foreseeable technology. The private key is used to produce digital signatures that authorize transactions, proving ownership of associated funds without revealing the key itself. Possession of a private key constitutes absolute, irrevocable, and unappealable control over all associated on-chain assets.

A reentrancy attack is a smart contract vulnerability in which a malicious contract repeatedly calls back into the victim contract before the initial execution has completed and state variables (such as balance mappings) have been updated — enabling the attacker to drain funds by exploiting the window between the fund transfer and the balance update. The attack pattern exploits the Ethereum execution model, in which an external call transfers control to the called contract before returning. The canonical mitigation is the Checks-Effects-Interactions (CEI) pattern: update all state variables before making any external calls.

A rug pull is a category of cryptocurrency exit fraud in which the developers or insiders of a project — typically a DeFi protocol, NFT collection, or token — abruptly abandon the project and withdraw all liquidity or treasury funds, rendering investors' holdings worthless. The term derives from the idiom "pulling the rug out from under" investors. Rug pulls are classified into three primary subtypes: (1) Hard rug pulls: malicious code embedded in the smart contract (e.g., hidden mint functions, transfer restrictions, backdoor admin keys) enables developers to drain funds programmatically; (2) Soft rug pulls: developers gradually dump their token allocations on the open market; (3) Liquidity rug pulls: developers remove all liquidity from a DEX pool, making the token untradeable and effectively worthless.

A seed phrase (also called a mnemonic phrase or recovery phrase) is a human-readable sequence of 12, 18, or 24 words — drawn from a standardized 2,048-word BIP-39 wordlist — that encodes the master entropy from which an entire hierarchical deterministic (HD) wallet's key tree can be deterministically regenerated. The seed phrase is the ultimate backup for all private keys derived from a given wallet. Any party who obtains the seed phrase gains complete, permanent control of all assets across all accounts and chains derived from that wallet, regardless of any passwords or PINs protecting the wallet software itself. The 24-word form provides 256 bits of entropy; the 12-word form provides 128 bits.

A Sybil attack is a network-layer attack in which a single malicious actor creates and controls a large number of pseudonymous identities (nodes, accounts, or validators) to gain a disproportionate and illegitimate influence over a peer-to-peer network. In blockchain systems, Sybil attacks can be used to: eclipse legitimate nodes (routing all of a victim's network traffic through attacker-controlled nodes), manipulate peer discovery, distort governance voting in token-weighted systems, or undermine reputation-based mechanisms. The attack is named after the 1973 case study of a patient with dissociative identity disorder, popularized by the book and film of the same name.