Cryptocurrency is rapidly gaining popularity in modern society and has been integrated into the existing economy. Successfully using cryptocurrencies requires one to have basic knowledge of how Blockchain works, as well as some technical skills. Although crypto is designed to be more secure through encryption, there are a few security risks associated with storing and trading them. The three major ones include:
Cryptocurrencies are neither regulated by governments nor central banks, and digital currency trading platforms provide limited transparency concerning their operations. The absence of a unified system for regulating crypto increases the uncertainty regarding their future. Plus, when cases of fraud and security breaches occur, the victims are not able to be compensated for their losses.
Even with their encryption, there have been cases of cyber attacks resulting in huge losses. Hackers are now capable of breaking into crypto exchanges, draining crypto wallets, and even infecting an individual’s computers or networks with malware that can steal cryptocurrency. Trading platforms and other third-party service providers are also susceptible to fraud, hacking, and other malicious online activities.
Danger of Volatility
Cryptocurrency prices have exhibited high volatility since their inception. It is not uncommon for the value of Bitcoins, which is the most popular and widely used cryptocurrency, to quickly drop or rise by hundreds, if not thousands of dollars. This extreme cost fluctuations increase the risks of using cryptocurrency. And, in the absence of regulation, unregulated brokers can use volatility to their advantage.
5 Ways to Stay Protected
Seeing as there’s no middle party to guarantee security, users must learn how to secure their cryptocurrencies. Here are a few of the ways to get you started:
Install a Virtual Private Network (VPN)
A VPN will encrypt all your traffic and also hide your IP address, location, and address. This lets you use your wallets, visit exchanges, and trade anonymously online as it should. Be sure to choose a VPN that doesn’t store user logs.
Use strong and unique passwords
91 percent of people know that reusing same password is insecure, nonetheless two thirds do it anyway, according to the Psychology of Passwords Report. Therefore, first step to reducing the chance of successful hacking attack is to use unique and strong password. A strong password is one that is not easy to crack. Avoid using personal information like birthday or family names, don’t use numbers or letters in sequence like 1234 or abcd, don’t use common dictionary words. Create a unique password with a mixture of lower and upper case letters, numbers, and symbols.
Subscribe to a secure email service
While most crypto traders use their regular Yahoo or Google email accounts, it might not be the best way to go. That’s because they track your online activity and even collect data, which they claim to use to build better services. Such tracking puts you, your transaction history, and even login credentials at an increased risk of being hacked. In that case, consider using a safer and more secure email service that doesn’t track your online activity or read your email.
Use a multi-signature address
It is important to use more than one key or at least a multi-signature to authorize a crypto transaction. Think of this like two-factor authentication for a bank account or email. Even if a hacker manages to obtain your password, they will need a second method of identification (usually a human element like a fingerprint or photo ID) to access your cryptocurrency wallet(s).
Beware of phishing attempts
Cryptocurrency investors and traders visit several different sites daily. Cybercriminals often create bogus websites to imitate exchanges to steal your login information. Others create fake or hacked ICO pages to lure users into making investments and eventually sending their funds to the criminal’s wallet. Be sure to double-check URLs for any typos or unusual characters to ensure you are logging into the right address. And, only click on links that are shared from verified official channels.
Securely using cryptocurrencies might seem tricky at first with so many risks and no third-party to rely on. But, if you are keen on implementing these and several other safety tips, you should be able to protect your assets.