The Evolution of Crypto Security: Adapting to Real-World Risks

The cryptocurrency landscape has undergone significant transformations since the inception of Bitcoin over 15 years ago. The industry has expanded to include a myriad of apps, protocols, exchanges, stablecoins, and token standards, collectively forming a trillion-dollar ecosystem. However, this growth has also led to more complex security risks and higher stakes. The traditional mindset that security problems are the sole responsibility of the holder is no longer tenable. Web3 designers must acknowledge that self-custody, although still relevant, cannot be the primary security burden on users. To thrive as a mainstream technology, the crypto industry must evolve to address real-world security risks such as social engineering, human error, and physical coercion, all while preserving core values like anonymity and pseudonymity. Decades of personal computing have shown that individuals' cyber hygiene is not foolproof, with threats like phishing, malware, and bogus QR codes persisting despite educational campaigns. Data from CoinLaw indicates a 40% increase in crypto phishing attacks in early 2025, resulting in $410 million in user losses, and a 450% rise in AI-powered deepfakes between mid-2024 and mid-2025. Furthermore, there has been an uptick in violent crypto-related attacks, with organized crime groups physically coercing high-net-worth holders into divulging their credentials. According to Chainalysis, over 30 'wrench attacks' were reported in 2024, with 2025 on track to double that number. These security issues are not anomalies but predictable threats that require proactive measures. Just as earthquake-prone regions build earthquake-resistant structures, the crypto industry should adopt a similar approach to security. Innovations in wallets, such as split wallets and multi-wallet accounts, have improved security and usability. Nevertheless, balancing these aspects remains a challenge. To better protect users, the industry must view security issues as feedback for design improvements. Every breach provides insight into system design flaws rather than just user behavior. For instance, a stolen password should prompt a reevaluation of the system's design rather than solely blaming the user. The crypto industry can also draw from successful examples in the non-Web3 space, such as multifactor authentication and behavioral signals, to enhance security without relying on constant user vigilance. Lastly, recognizing that security risks now extend beyond social engineering to include physical assaults is crucial. Designing systems that account for the possibility of physical abuse is essential for the industry's growth. The rugged ethos of individual responsibility that defined crypto's early days is no longer suitable for an industry that now handles trillions in assets and impacts human livelihoods. While there are no foolproof solutions, cryptographic keys will remain vulnerable to phishing, and humans will continue to be imperfect. However, by designing for real people rather than ideal users, the crypto industry can create products that strengthen lives while protecting against weaknesses. Ultimately, security is no longer a user problem but an industry-wide challenge that requires a collective and adaptive approach.