Ethereum is one of the most developed cryptocurrencies, and it is notable in the industry due to its smart contract function, which automates contracts. It is Bitcoin’s biggest competitor, as its value increased considerably in the past years, and the innovative technology behind it has made decentralization more approachable than ever. At the same time, experts believe that cryptocurrency will continue with an upward trend when making an Ethereum price prediction, reaching a double value by 2030.
However, Ethereum isn’t perfect, especially when we consider the blockchain vulnerabilities, such as scalability issues, that greatly affected its performance. At the same time, Ethereum suffered various modifications with the improvement roadmap that includes multiple updates because, despite the ultimate development goal, the network is more sensitive when an upgrade is established. Therefore, investors might lose their trust in the platforms’ reliance, so can it affect prices?
Ethereum security model supports emerging technologies
Ethereum’s decentralized blockchain distributes security across the ecosystem, with nodes, developers, and staking pools ensuring that no external entity can manipulate the network. Thanks to the new PoS consensus mechanism, the risk of centralization is less prominent than in other blockchains.
Although Ethereum started with the well-known PoW system, it switched to PoS for security and scalability. The consensus mechanism is less energy-intensive than regular mining, making Ethereum one of the most sustainable cryptocurrencies out there. At the same time, Ethereum ensures a smart contract auditing feature that identifies potential vulnerabilities and can foresee security breaches.
Still, recent updates show instability
While Ethereum is praised for its technological advancement, developers find significant flaws in original designs and programming languages. Experts found them in Ethereum’s ERC-20 token system, which allows developers to create tokens backed by smart contracts for products and services. Some of the most famous ERC-20 tokens include Tether USD, Binance USD and Shiba Inu, so the system is quite reliable.
However, experts recently discovered that the ERC-20 standard is full of vulnerabilities, especially since most of these tokens are the ones that hackers steal more frequently in phishing scams. The functions of “permit” and “increase allowance” can be taken advantage of, so victims mistakenly approve their own tokens’ stealth.
The main problem seems to be the poor Ethereum design for the standard, which has plenty of security holes that cannot be easily fixed. On the other hand, blockchains like MultiversX or Cosmos-based ecosystems could solve the issue.
ETH and ERC-20 tokens interact differently with smart contracts
Another concern is how Ethereum’s coin and the standard token communicate with the blockchain because the system seems to put more strain on investors’ portfolios. Sending Ethereum to a smart contract is simple, but ERC-20 tokens require a tedious process through which malicious individuals can enter and alter the confirmation procedure.
One of Ethereum’s leading developers discussed the issue and stated that the standard is flawed in its design, which is why it’s so difficult to change it and add improvements. Therefore, it’s even possible for the function to create more cyber risks in some cases.
Still, we must consider that cyber-attacks are getting more sophisticated by the year, as even professionals admit they’ve been tricked once due to hacker’s unique phishing methods. Sometimes, even using preventive measures is not enough, so investors must be careful with whom they trust when making a transaction.
Common scams to be wary of with Ethereum
Although most crypto scams are the same, some are targeting Ethereum especially due to its extensive ecosystem and community, because it’s easier to find someone vulnerable in a bigger group. Generally, phishing scams happen with every financial form, from cryptocurrencies to digital money, because they’re easy to construct.
Still, what you should be more careful with include the following:
- Twitter (X) ad phishing that uses a link preview feature that looks like Ethereum’s legitimate website, as the mechanism leverages the platform’s generating preview feature;
- Giveaway scams come in the form of 2-for-1 forms in which users are deceived to think that sending a certain amount of ETH to a wallet address will return them a doubled sum;
- Social media hacks are easier to recognize, but they’re still efficient since a similar Twitter scam resulted in 11 bitcoins stolen, or $500,000;
- Celebrity giveaways are also frequent, and with the use of AI and good video editing skills, hackers make it seem like Vitalik Buterin or Elon Musk are offering their money;
Ethereum-based assets are also in danger
While Ethereum’s cryptocurrency is most of the time targeted for hacks, the blockchain’s most innovative assets are also the subject of numerous scams. NFTs come in second as the most used way of scamming people since many users found that the NFTs they bought had no intrinsic value. DeFi tokens, stablecoins and game tokens are also exposed to similar risks, especially since they’ve become more popular on the blockchain.
One of the most common methods of NFT scamming includes airdrops, which are often used by new projects to spread awareness. In this case, airdrop scams include fake promotions, impersonation, and unsolicited NFTs that seem too good to be true, but they can lure some people into their trap.
Learn more to avoid problems
While taking security precautions is recommended to withstand these risks, it’s best to read as much as you can about the crypto industry and get knowledgeable in Ethereum or any other cryptocurrency you’re interested in because being aware of the potential risks makes you more alert of the surroundings. There’s always something new to learn in crypto, so make sure you’re up to date with the latest hacking discoveries, updates and vulnerabilities to protect yourself and your assets better.
Do you trust Ethereum?
Ethereum, one of the most essential cryptocurrencies on the market and the main competitor of Bitcoin, has become the subject of several security concerns. Smart contract’s lack of protection, exposure, and scams have affected the crypto market, affecting numerous investors and troubling developers. Therefore, crypto users must be wary of any potential risks and never hurry to make transactions.