Honeypots are one way to deal with hacking and various other crimes in the world of crypto assets.

This happens because the problem of hacking and scamming is still a problem that interferes with the security and convenience of crypto asset transactions on the blockchain.

So, check out the review below to learn more about what a honeypot is, how it works, and its types.

What are Honeypots?

Honeypot is a smart contract deliberately created as a virtual bait or trap aiming to trick hacker attacks.

The mechanism is to use a computer system that is deliberately designed to be easily infiltrated, with the aim that hackers can exploit platform vulnerabilities.

Thus, the developer/developers team can study it to improve the security policy of the crypto project.

For example, a honeypot allows hackers to quickly drain Ethereum’s native asset, ETH, from smart contracts.

In reality, it is a trap deliberately designed by the smart contract development team to detect cyber attacks and help them gather information.

How Honeypots Work in the Crypto World

The way honeypots work begins when smart contract developers design several trapping mechanisms and reveal the private keys of hackers trapped inside.

Former C-Dili auditor and MythX tool builder Gerhard Wagner explained that smart contract developers use several components to trick hackers. Here is the description.

1. Smart Contract Vulnerabilities

Here, the developer will design a weak/vulnerable-looking smart contract code that makes it easy for an attacker to withdraw all available funds later.

2. Balance

As a rule, the developer will set a honeypot trap on the initial balance of 0.5 to 1 ETH.

Is Crypto Honeypot Legal?

So, is this crypto honeypot legal? When referring to the privacy law used in the United States, the Federal Wiretap Act, this action is illegal.

This mechanism captures individual communications in real time without their knowledge/permission. After all, it violates their privacy.

Types of Honeypots

Based on the use of smart contracts and the type of interaction, honeypots are divided into several types. Here’s an explanation.

Based on Smart Contract Design and Implementation

Research Honeypots

This honeypot works by getting information about hacker tendencies, vulnerabilities, and types of malware currently targeted by adversaries by looking at the network environment and the outside world.

This information can help you decide on preventive defenses, future investments, and patch priorities.

Production Honeypot

Aimed at detecting active network penetration and tricking hackers, this honeypot provides extra monitoring opportunities and fills the common detection gaps surrounding network scanning.

Not only that, but this production honeypot network also identifies and performs lateral movements.

So that the process of obtaining data remains the primary responsibility.

This production honeypot generally runs services that usually run in a networked environment together with other production servers.

By Type of Interaction

High-interaction honeypot

Although less sophisticated and storing fewer data, high-interaction honeypots are capable of operating large numbers of services.

In addition, this type runs (or appears to run) all the services usually associated with production systems.

This includes a functioning operating system, although the high-interaction honeypot is not intended to replicate a full-scale production system.

Mid-interaction honeypot

Mid-interaction honeypot has a working mechanism that mimics the characteristics of the application layer even though it doesn’t have an operating system.

This type of one attempts to annoy/confuse the hacker so that the original network has more time to figure out how to deal with the attack properly.

Low-interaction honeypot

This type is most commonly used in production environments because it runs several services and is used as an early warning detection tool.

Because of its popularity, this honeypot has been installed by many development teams in various network segments because it is easy to set up.

Pure honeypot

Typically, pure honeypots are large-scale, production-like systems used across multiple servers.

This type is full of censorship and includes confidential data and user information. During complex to manage, the information they provide is invaluable.

Types of Crypto Honeypot Technology

Crypto honeypots use the following types of technologies.

1. Client Honeypots

Actively, honeypot clients will look for malicious servers targeting clients. They also carry the honeypot for any suspicious/unexpected changes.

Typically, these systems are virtualized and contain a plan to keep the development team safe.

2. Honeypot Malware

This type of technology works by identifying malware using established replication and attack channels.

Honeypots (like Ghost) are designed to look like USB storage devices.

For example, if a machine is infected with malware propagated via USB, the honeypot will trick that malware into infecting the simulated device.

3. Honeynets

This is a network that uses several honeypots. This network is designed to follow the actions and motives of hackers while containing all incoming and outgoing communications.

4. Spam Honeypots

A spam honeypot is used to simulate open mail relay and open proxy.

Initially, the spammer will email himself to test the available relay emails.

If successful, then they will send spam in large numbers. This honeypot could detect and recognize tests and successfully block the large amount of spam that followed.

5. Honeypot Database

Some organizations use a database firewall because structured query language injection often goes undetected by the firewall.

Their goal is to build a bait database and provide honeypot support.

How to Detect a Honeypot in Crypto?

Among the methods used to detect the presence of a honeypot in crypto is by checking trading history.

Usually, crypto assets can be traded at any time when desired. In this case, there will be lots of coin purchases made in the honeypot, but users will find it challenging to sell them.

If this happens to your crypto asset, it shows that it is not a legit coin, and you should stay away from it.

In addition, with a data science approach based on contract transaction behavior, you can also classify the contract as a honeypot or not.

Conclusion

Being one way to deal with hacking and several other crimes in the world of crypto assets, a honeypot is a smart contract created as a virtual bait/trap.

The goal is to fool a possible hacker attack. With this mechanism, developers can later improve the security policies of their crypto projects.

Based on the design and application of smart contracts, the types of honeypots are divided into research and production honeypots.

Meanwhile, based on the type of interaction, the honeypot includes a high-interaction honeypot, mid-interaction honeypot, low-interaction honeypot, and pure honeypot.

The types of crypto honeypot technology consist of client honeypot, honeypot malware, honeynet, spam honeypot, and database honeypot.