Contradictory Is the 2025 Cryptocurrency Security Paradox: Why Are Losses Increasing Despite More Secure Protocols

The year 2025 recorded the largest losses in cryptocurrency security history, yet the paradox is that on-chain protocols are becoming increasingly difficult to breach. The contradictory situation clearly indicates a fundamental shift in the digital asset security threat landscape: attacks are no longer targeting technology but humans.

According to Mitchell Amador, CEO of on-chain security platform Immunefi, this phenomenon is not a bad sign for blockchain technology itself but a signal that malicious actors have adapted to increasingly robust infrastructure. “On-chain security has experienced a dramatic improvement,” Amador said in an exclusive interview, “but criminals are becoming more sophisticated in targeting human elements and operational aspects.”

Fraud Outpacing Hacking: Human Factors Become the Weak Point

Recent data from Chainalysis shows a significant change in crypto crime methods. About $17 billion in assets were lost in 2025, not due to exploited smart contract vulnerabilities, but through Web2-based operational scams: password theft, social engineering, and employee manipulation.

The largest losses no longer come from blockchain—rather, from fundamental issues like compromised private keys, hacked devices, or fake customer support successfully deceiving victims. Human error, not broken code, has become the primary root cause of fund losses.

Chainalysis Data Reveals: Identity Theft and AI-Powered Scams Surpass Technical Attacks

The Chainalysis report released last week revealed that identity impersonation scams alone experienced a year-over-year surge of 1,400%, while AI-based scam schemes proved to be 450% more profitable compared to traditional scam methods.

The latest shocking case involved theft of $282 million in Bitcoin and Litecoin through social engineering attacks. Blockchain researcher ZachXBT revealed that victims lost 2.05 million LTC and 1,459 BTC, with the stolen proceeds immediately converted into Monero through various instant exchanges to erase traces.

Such attacks do not require high technical expertise—only psychological manipulation and well-planned persuasion.

Security Paradox: Why Protocols Are Safer but Investors Suffer More Losses

An observation made by security experts is contradictory: while DeFi and on-chain protocol code become increasingly resistant to exploits, the main attack surface has shifted entirely toward humans. Amador emphasizes that this does not mean blockchain code is becoming weaker—quite the opposite.

“From the perspective of DeFi and on-chain protocols, 2026 will be the best year for security,” Amador confidently states. “However, the worst year will continue for those who do not safeguard their operational and human factors.”

Humans: The New Weak Point in an Increasingly Sophisticated Crypto Ecosystem

As code becomes more difficult to exploit, the direction of cybercrime attacks shifts toward more vulnerable targets: human operators. Amador warns that humans will become the primary focus for attackers in 2026 and beyond.

Ironically, despite increasing technical security, most projects still neglect basic defense implementations. According to Amador, more than 90% of projects still have critical vulnerabilities, while adoption of defense tools remains minimal: less than 1% of the industry uses on-chain firewalls, and fewer than 10% utilize AI-based detection tools.

AI: The Double-Edged Sword in the 2026 Crypto Security War

Artificial intelligence will change the security dynamics on both sides of the spectrum. Defenders will rely on AI-based monitoring operating at machine speed, while attackers will leverage similar technology for vulnerability research, exploit development, and large-scale social engineering.

However, Amador’s most visionary warning is not about smart contracts or digital wallets. It’s about what will happen when crypto systems start making autonomous decisions without human control.

On-Chain AI Agents: An Unforeseen Security Threat

On-chain AI agents represent a completely new attack surface. They can operate faster and with greater capacity than human operators but also carry unique vulnerabilities: if their access pathways or control layers are compromised, the potential damage could increase exponentially.

“We are still in the early stages of understanding how to properly secure AI agents,” Amador said. “This will be one of the most significant security challenges in the next cycle.”

Overall, Chainalysis data shows that scammers are becoming more skilled at draining value from individuals, while Amador’s perspective reveals that protocols are becoming more resistant to pure code exploits. Together, this picture indicates a future where the security battle in crypto is no longer fought solely on-chain but through user interfaces, organizational controls, monitoring systems, and security awareness education—making the paradox a fundamental characteristic of the modern crypto security era.