A replay attack or attack happens is when a malicious actor intercepts and then repeats the transmission of piece of data that is moving through a cryptocurrency network.
This is accomplished via an originator or an entity that succeeds in intercepting the data and re-transmitting it, potentially as part of a false attack by IP packet substitution.
In essence, these kinds of attacks can be used to trick financial institutions into duplicating transactions, or to illicitly access users’ accounts and withdraw money directly out of them.
How to Defend Against a Replay Attack?
Replay attacks can also target security protocols using replay of messages from a different context into the intended context.
In other words, this assault can trick honest participants into thinking they have successfully completed the protocol run.
In cryptocurrency, replay attacks are particularly common when a network undergoes a hard fork and splits into two separate networks.
This is because a transaction that is confirmed on the original network will also be valid on the other network.
As such, a malicious actor could attempt to broadcast the same transaction twice over the two separate networks and receive double the amount of funds.
Thankfully, a wide range of countermeasures exist to mitigate the occurrences of replay attacks.
Replay attacks can be prevented by tagging each encrypted component with a session ID and a component number.
Moreover, the deployment of timestamps or one-time passwords have also proven effective defenses against replay attacks.
The latter can be used during the authentication process to establish trust between the two parties that are communicating with each other.