Everything you need to know about Honeypot Scams

On contemporary blockchains like Ethereum, intelligent contract applications can be run over a decentralized network of nodes. As smart contracts gain popularity and value, they become a more attractive target for attackers. In recent years, hackers have targeted several intelligent contracts.

A new pattern, however, seems to be taking hold: instead of searching for weak contracts, attackers are now using a more proactive approach. Instead, they send out arrangements that seem vulnerable but have concealed traps to deceive their victims into falling into them. This particular kind of contract is known as a “honeypot.” A honeypot crypto trap is what, though?

What exactly is a crypto honeypot used for? Why?

Honeypots are intelligent contracts with a design flaw that enables any user to drain the contract’s Ether (Ethereum’s native currency) by sending a specific amount of Ether to the agreement in advance. However, when the user tries to take advantage of this apparent bug, a second, unidentified trapdoor appears, preventing the ether draining from being successful. Now tell me what a honeypot does.

Similar to other forms of fraud, honeypot assaults work because people are commonly susceptible to deception. The user intends to overlook indications that the contract contains a second vulnerability instead of concentrating solely on the apparent problem. As a result, people’s greed and presumptions frequently prevent them from accurately estimating risk. So are honeypots prohibited?

How do honeypot scams operate?

The user’s money will be imprisoned in crypto cyber attacks like honeypots, and only the attacker who built the honeypot will be able to recover it.

Computer, software, and information used to replicate the behavior of an entire system that can be alluring to attackers, such as Internet of Things devices, a banking system, or a public utility or transit network, make up a honeypot operation in general. In Ethereum intelligent contracts, honeypots can be set up by an attacker without any specialized knowledge. In truth, an attacker is like any other Ethereum user in terms of abilities. All they need to do to set up the smart contract and bait it is the money.

Despite seeming like it belongs to the network, it is isolated and is under observation. All efforts to communicate with a honeypot are hostile because genuine users have no reason to access it. In the demilitarized zone of a network, honeypots are often used (DMZ). This tactic keeps it linked while separating it from the top production network. The risk of a compromised leading network is decreased if an attacker can access a honeypot in the DMZ while it is being watched from a distance.

Honeypots can be positioned outside the external firewall facing the internet to detect attempts to access the internal network. The honeypot’s exact placement will vary depending on its complexity, the type of traffic it intends to draw, and how close it is to essential business resources. No matter where it is placed, it will always be separated from the production environment.

While deterring attackers from targeting real-world assets, logging and watching honeypot activity provide information on the level and types of threats that a network infrastructure faces. Cybercriminals may seize control of honeypots and use them against the organization that sets them up. Additionally, cybercriminals have utilized honeypots to gather data on researchers or organizations, act as ruses, and disseminate false information.

A centrally located collection of honeypots and analysis equipment is called a honey farm. At the same time, a honeynet comprises two or more honeypots on a network. Virtual machines are widely used to host honeypots. For instance, if malware compromises the honeypot, it may be quickly repaired.

Both open-source and for-profit solutions can help with honeypot deployment and management. There are individual honeypot systems for sale and honeypots bundled with other security programs that are marketed as deception technology. On GitHub, you may get honeypot software to help beginners learn how to use honeypots.

Varieties of honeypots

Based on the creation and use of smart contracts, there are two kinds of honeypots: producing and researching honeypots. Research honeypots are used to track attacks and examine hostile behavior in the field.

They look at your environment and the outside world to gather information on the types of attackers, vulnerabilities, and malware strains that adversaries are currently focusing on. This information can guide your decisions about preventative measures, patch priority, and upcoming investments.

On the other hand, production honeypots are designed to catch active network penetration and trick the attacker. Obtaining data is a primary priority since honeypots add to monitoring options and close frequent detection gaps surrounding identifying network searches and lateral movement.

Services that run in your environment alongside the rest of your production servers are run on production honeypots. In comparison to honeypots used for production, research honeypots are more complex and can store more types of data.

High-interaction honeypots operate numerous services, similar to pure honeypots, but are less sophisticated and store less information. High-interaction honeypots operate (or appear to run) all of the services frequently associated with production systems, including functional operating systems, even though they are not designed to emulate full-scale production systems.

 With the aid of this honeypot form, the sending organization monitors the behaviors and tactics of attackers. High-interaction honeypots are resource-intensive and challenging to manage, but the results might be worthwhile. The application layer’s properties are imitated by mid-interaction honeypots, which lack their operating system. so as to provide businesses with additional time to plan an attack, they attempt to obstruct or confuse assailants.

The most common honeypot utilized in a production environment is the low-interaction honeypot. Low-interaction honeypots provide a limited number of services and are generally employed as early detection systems. Since honeypots are easy to set up and manage, many security teams utilize them to cover a variety of network segments.

The system is a massive, production-like honeypot that utilizes numerous servers. It contains “confidential” data and user information and is packed with sensors. Even though managing the information they offer can be difficult and complex, it is pretty useful. 

Client honeypots: Most servers that act as honeypots are waiting for client connections. These systems often have a containment plan and are virtualized to protect the research team. Client honeypots keep an eye out for unusual or unexpected changes and actively hunt down rogue servers targeting clients.

Malware honeypots: These detect malware by utilizing established channels for attack and replication. Honeypots (like Ghost) are made to resemble USB storage devices. The honeypot will trick the malware into infecting the simulated device, for instance, if malware that spreads by USB infects a machine.

Honeynets: A honeynet is a network of numerous honeypots rather than a single system. Honeynets are intended to track the movements and goals of an attacker while containing all incoming and outgoing communication.

Spam honeypots are used to emulate open mail relays and open proxies. Spammers will initially test the available mail relay by sending themselves an email. If they are prosperous, they will broadcast a tonne of spam. This honeypot can identify the test and successfully stop the subsequent flood of spam.

Database honeypot: Some businesses set up a database firewall to create dummy databases and provide honeypot support since structured query language injections frequently escape detection by firewalls.

How do I recognize a crypto honeypot?

In principle, a cryptocurrency should be available for purchase and sale anytime. The trading history can be examined to spot a honeypot crypto scam. In a honeypot scam, there will be a lot of buyers for the coin, but it won’t be easy to sell. This suggests that it is not a genuine coin; therefore, stay away from it. Additionally, the classification of contracts as honeypots or non-honeypots can be done using a data science approach based on the behavior of contract transactions.

Where in Ethereum intelligent contracts might honeypots appear?

Three different aspects of the development of Ethereum intelligent contracts may contain honeypots.

The Ethereum virtual machine (EVM)- Despite adhering to a set of accepted norms and guidelines, brilliant contract authors can present their code in misleading or ambiguous ways at first glance. These strategies can cost unwary hackers their money.

The solidity compiler is the second opportunity for intelligent contract creators to profit. While some compiler-level issues have extensive documentation, others might not. Unless the contract has been tested in real-world situations, these honeypots can be challenging to find.

The third type of honeypot is predicated on the information provided by blockchain explorers is insufficient: the Etherscan blockchain explorer. While many people take Etherscan’s data at face value, it may not always be accurate. Conversely, cunning, intelligent contract developers can benefit from some of the explorer’s peculiarities.

How may honeypot contract scams be avoided?

This section explains how to avoid honeypot fraud to prevent losing your money. Use BscScan if the coin you’re considering is on the Binance Smart Chain, or Check if the coin you’re purchasing is part of the Ethereum network with Etherscan. You can use tools to help you spot warning signs and stay away from these currencies.

Find your coin’s Token ID and enter it on the appropriate webpage. On the following screen, click “Token Tracker.” There will be a tab called “Holders” visible. There, you can see every wallet with tokens and liquidity pools. Unfortunately, there are a lot of different item combinations that you need to be aware of.

Null dead coins A project is comparatively shielded from rug pulls if more than 50% of the coins are in a dead wallet. Be wary if fewer than half of the coins are dead or if none are.

No audit If they are audited by a reliable company, the likelihood of a honeypot is almost always avoided.

Holders for large wallets: Avoid cryptocurrencies with a single or limited number of wallets.

Check out their website: This should be pretty simple, but if the website looks rushed and the development is subpar, take note! One method is to enter the domain name at whois.domaintools.com to find out when it was registered for a website. If the domain was set up within a day, fewer of the project’s beginning, you might be very sure it is a fake.

Look them up on social media: Scam projects typically have photographs that were taken from other people and are of poor quality, grammatical errors, unappealing “spammy statements,” no connections to pertinent project details, and so on.

Another valuable tool for identifying cryptocurrency honeypots is Token Sniffer. If any warnings are issued, stay away from the project. It’s possible that the “No past similar token contracts” sign erroneous because many applications currently use contract templates.

And finally, while buying cryptocurrencies, do your homework before spending your hard-earned money. Go to PooCoin, reenter the Token ID, and keep an eye on the charts whether the Binance Smart Chain lists your coin. If only one or two wallets sell your preferred coin, or if none are, stay away. It is not a honeypot if numerous wallets are selling the selected coin. It’s most likely a honeypot.

Also, read – Will Facebook’s Blunder Ignite a “Blockchain of Data Privacy” Movement?

What distinguishes a honeypot from a honeynet?

Having a connected honeypot network has certain advantages. Businesses can monitor how intruders interact with a single resource or network point, move across points on the web, and interact with many issues simultaneously. A collection of two or more honeypot networks is called a honeynet.

To increase the realism of the setup, it is intended to convince hackers that they have successfully penetrated the network. Deception technology refers to honeypots and honeynets with more sophisticated implementations, such as next-generation firewalls, intrusion detection systems (IDSes), and secure web gateways. A system or software known as an intrusion detection system keeps an eye out for malicious activity or network policy violations. A honeypot can react to potential attackers in real-time thanks to automated deception technology capabilities.

Businesses can use honeypots to stay on top of the constantly shifting risk environment as new cyber threats appear. Even though it is hard to predict and stop every assault, honeypots provide essential information to ensure an organization is ready and arguably the most significant way to catch an attacker in the act. They’re also a valuable resource for cybersecurity experts.

What benefits and drawbacks do honeypots have?

Honeypots gather information from actual attacks and other illegal behavior, providing analysts with much information. Furthermore, the number of false positives is decreased. A honeypot, for instance, reduces the number of false positives produced by cybersecurity detection systems since real users have no incentive to contact the honeypot.

Honeypots are also a wise investment because they only react to malicious activity and don’t require high-performance resources to scan vast amounts of network data in search of assaults. Finally, honeypots can detect harmful activity even if an attacker uses encryption.

There are several advantages to using honeypots. However, they also come with a lot of hazards and disadvantages. Honeypots, for instance, only gather information in the event of an attack. Since no attempts have been made to access the honeypot, no data is available to study the attack.

Additionally, the honeypot network only gathers harmful traffic when an attack is initiated against it; if an attacker senses a network is a honeypot, they will steer clear of it. Since legal production systems can usually be distinguished from honeypots, knowledgeable hackers can do the same using system fingerprinting techniques.

Despite being cut off from the leading network, honeypots eventually link to it to provide administrators access to the data they contain. A high-interaction honeypot is frequently thought to be riskier than a low-interaction one because it aims to entice hackers to gain root access. In general, honeypots help researchers comprehend network system hazards, but they shouldn’t be used in place of traditional IDS. For instance, if a honeypot isn’t set up correctly, it could be used as a launching pad for attacks on other systems or as a means of gaining access to real-world scenarios.