Crypto wallets with their valuable contents are an attractive target for cyber criminals. Cyber attackers look for any opportunity to breach both hot and cold crypto wallets, and wallet users rely on their wallet providers to keep their crypto currency safe.

As a result, crypto wallets implement information security controls to keep them safe, from secure access keys to offline storage. However simply putting the defences isn’t enough – wallet developers need to verify these controls in order to check for vulnerabilities, and ensure that they are configured correctly to withstand attack.

Whether you are testing hot wallet or cold wallet security, crypto wallets security testing methods such as penetration tests enable you to discover what you may have missed, and which system components may be vulnerable to attack, and how they could be compromised.

What are the security risks for crypto wallets?

Throughout their history, both hot and cold crypto wallets have been under attack. Some 

attacks have even been successful. Crypto wallets security testing can help identify whether a particular wallet has protections in place for these risks (including mitigations for human errors).

The forms of attack faced by crypto wallets include:

Rerouting tokens – intercepting crypto transfers by inserting a different token and diverting the funds to a different wallet.

Hacking of access keys – exploiting vulnerabilities that give attackers access to access keys, including coding errors, or human errors.

Social engineering – successful phishing attacks both at wallet management level and at user level, which reveal access key or password information, and enable attackers to access wallets.

Cyber attacks – some successful attacks have followed on from earlier attacks that revealed wallet user PINs, brute force attacks on user passwords, hacks on key storage, and code injections and data breaches.

Crypto wallets security testing options

Crypto wallets security testing can take several formats.

Security audits of the wallet’s security features will look into the security layers in place, and ensure that they are being maintained, that procedures are being followed, and that there is an overarching commitment to wallet security.

Threat modelling and risk assessments identify the threats to a wallet from different sources, including cyber criminals, and assess which are the most likely and their potential impact, and set priorities for managing them.

Penetration testing emulates the attack methods used by cyber criminals to get into the heart of the wallet itself to identify security flaws and recommend measures to fix them. With crypto products pentesting you take a proactive approach towards securing your wallet.

Crypto products penetration testing

Penetration testing for crypto wallets is a form of assessment that emulates the methods undertaken by cyber criminals to carry out an attack against it. Crypto products penetration testing is a simulated attack aimed at discovering existing vulnerabilities that could lead to a security breach of a crypto wallet. The testing focuses on goals, charting the paths that attackers could take through the wallet in order to compromise it, or steal funds from it, and identifying cross platform flaws that may otherwise fall between teams.

Crypto products penetration testing undertaken by an experienced, independent third party will go through the various components of the wallet’s underlying technology in order to identify any security vulnerabilities originating from flawed code or design, configuration errors, and so on. The outcome of the testing can then be shared with developers to help them understand the security risks from each flaw. Crypto products penetration testing will provide remediation recommendations to further help teams understand the wallet’s security requirements, and enable them to build secure practices into future wallet updates.

What is involved in crypto wallets security testing?

Crypto wallets security testing usually involves several stages. These steps include:

Preparation, setting the scope for the crypto products pentesting, reconnaissance and knowledge gathering.

Assessment, carrying out the testing according to the defined scope, searching for and testing the vulnerabilities that the testing team identify.

Reporting, providing a comprehensive report describing the findings, analysing their impacts, and setting out recommendations for improvement.

Ongoing support, if required, supporting the team with implementing recommendations, and carrying out further testing in future.

The method used in crypto products penetration testing differs according to needs. You can choose how much or how little information to give to the tester (blind testing), whether the tester is given internal permissions to simulate the attack from the inside, or to attack from the outside (internal vs external testing), and whether the internal team are aware of the testing (double blind testing). Finally, you can even choose to work together on the testing so that internal teams can see how it works in action.

Why crypto products penetration testing is necessary

Improve security posture.

Ultimately, penetration testing for crypto wallets helps build a more robust security posture and put you one step ahead of attackers by identifying the vulnerabilities that could be exploited before they do. 

Reveal how effective the wallet’s security actually is.

While you may have an in-house testing or quality assurance team in place to check the security of your wallet, a third party penetration test or external audit provider is a specialist team who will tell you the truth. They may take a different approach to the wallet’s security, potentially disclosing vulnerabilities that you hadn’t thought of.

Help you understand the attacks that your wallet is vulnerable to. It will also help you understand interdependencies between vulnerabilities.

Risk assessment and remediation advice.

Crypto products pentesting gives an extensive, goal oriented view of each vulnerability found, including the level of severity, risk of it occurring, interdependencies with other vulnerabilities, impact, and mitigation recommendations. This information provides a useful risk assessment for wallet developers to prioritise which vulnerabilities to address, and in what order.

Securing crypto wallets is an ongoing process

Securing crypto wallets and crypto wallets security testing are ongoing processes. Wallet updates are both necessary to maintain a strong security posture, but can also introduce new vulnerabilities. Hackers and attackers are constantly refining their methods, or finding new ways of attack. Regular crypto products pentesting will help ensure that the wallet stays secure over time.

Stay safe.