What will the 2010’s be remembered for? The significant strides made in the technology industry that allowed the creation of advanced smartphones? The ways much of our work became remote-compatible, allowing many to work from home? The strengthening of connections made through the Internet?
Or will cryptocurrency become the number one trend that popped up in the 2010’s?
It’s no secret that Bitcoin made waves in the late 2010’s, creating a boom in crypto-trading, crypto-mining, and vice versa. The aforementioned boom was so widespread, in fact, that NVIDIA and AMD found themselves in a GPU shortage, keeping many consumers from upgrading their computers.
The “crypto-craze” has died down since then, but many still participate in the crypto-trading scene. However, not many of these people realize the security threat crypto poses.
That’s not to say you shouldn’t participate in crypto-trading—if you have the funds, do it! But there are risks involved besides losing your money due to poor trading etiquette. Let’s go over a few of these risks really quick.
3 Security Risks Haunting Cryptocurrencies Today
1. Crypto-Wallets that Don’t Work or Don’t Protect A User’s Cryptocurrency
Storing cryptocurrency is a concept that evades the understanding of many. You can’t simply send ten Bitcoin to your bank account. No, cryptocurrency was designed to be 100% anonymous; no trail should be left when buying, selling, or trading cryptocurrency.
To solve the problem of storage, a few creators designed “crypto-wallets”, software that allows the storing and use of cryptocurrencies. You may occasionally see crypto-wallets with physical security as well, such as a USB drive, but these are rarer than software-based wallets.
Crypto-wallets are necessary for anyone looking to get involved with crypto-trading—there is no other way to store cryptocurrency.
Unfortunately, similar to physical wallets, not all crypto-wallets are secure. Take “brain wallets”, for example. Studies show that brain wallets, which employ cryptography practices to secure wallets, run risk of being hacked easily.
2. Crypto-Fraud Practices that Scams Users Out of Their Money
Cybercriminals plague the Internet. No matter where you go, what website you visit, or what application you download, hackers will find a way to work their way onto your device(s) and ruin your day. It seems inevitable!
The cryptocurrency world is no different. Cybercriminals lie in wait, waiting for someone to mess up and fall into their scams. Some cybercriminals send out phishing emails that ask for a user’s crypto-wallet information so that said criminal can gain access.
Other cybercriminals run Ponzi scheme websites that scam people out of their cryptocurrency.
Point is, there is no shortage of ways cybercriminals can trick you into giving them your assets. The Wall Street Journal reported that cybercriminals have managed to, as of 2020, steal $4 billion from investors.
3. Trading Platforms Getting Hacked
Similar to how cryptocurrency requires specialized storage tools (crypto-wallets) in order for users to keep and track their Bitcoin, trading and exchanging crypto requires specialized trading platforms. These platforms are designed from the ground-up to house a sort-of “stock market”, where users can trade, exchange, sell, or buy cryptocurrency.
However, many of these trading platforms fail at delivering a secure experience for their users. According to ICOrating.com and Bitcoin.com, many trading platforms don’t enforce proper security practices. For example, the ICOrating study shows that 41% of exchanges (platforms) allow passwords with fewer than 8 symbols. 37% of them don’t even require numbers in the password!
Suffice it to say, a majority of these platforms put their users at risk, and it’s only inevitable that some of them get hacked or taken down—something else that will affect users.
5 Ways to Keep Your Cryptocurrency Out of Criminal Hands
To reiterate an earlier point: this article is not meant to deter you from participating in cryptocurrency trading, but to educate you about the unknown risks that plague the crypto industry.
And if you still find yourself itching to trade your Bitcoin, you’ll need to know how to protect yourself against these risks. Fortunately, there are a few ways to do so, five of them right below this!
1. Anonymize your Presence
While the creators of Bitcoin had anonymity in mind when designing it, it doesn’t mean that your presence is always anonymized. There are a few ways to anonymize your presence and activity while dealing with cryptocurrency, however.
For example, you could use a proxy or a VPN such as ExpressVPN to hide your activity from third-parties, including your ISP and government. These work well and are recommended for most transactions.
2. Use a Multi-Signature Address
Two-factor authentication allows users to secure their accounts even more, requiring a verification code to login, the code coming from either email or text. The same logic works for certain cryptocurrency addresses, an identifier for someone’s payment or wallet.
These are called multi-signature addresses, and require confirmations from multiple users before a transaction can be made. This helps users by ensuring a cybercriminal can’t simply go on a spending spree with someone’s Bitcoin.
3. Avoid Phishing Scams
Phishing scams litter the Internet, filling up the spam boxes of thousands of emails. Unfortunately, these scams work, and many people find themselves victim to identity theft, financial fraud, and various other crimes.
The same can be said for cryptocurrency investors. Phishing scams often target these investors, and you are no exception. Learning how to identify and avoid these phishing scams will improve your security tenfold.
4. Stick with Reputable Trading Platforms
While many trading platforms get created throughout the years, only a few will stick around. It’s in your best interest to stick with reputable trading platforms, platforms that take your security seriously. Unfortunately, there’s not a good way to gauge this, but sticking with established, commonly-used platforms is a start.
5. Keep Your Wallet Information Safe
Lastly, you should always keep your crypto-wallet information out of the way of anyone that’s not you; if someone were to get their hands on your wallet information, they could wreak havoc and ruin you financially.
It’s best to write down the information and store it somewhere that it can’t get lost or stolen (like a safe).