That cryptocurrencies offer a relatively secure way of carrying out transactions, is one of the most prominent arguments presented by people in favor of Blockchain technology.
And true to this argument, one of the ideas behind digital currencies was to provide an alternative transaction avenue that is more safe and secure.
Today, it is still true that cryptocurrencies such as Bitcoin are more secure compared to the traditional methods of transacting.
These digital currencies are encrypted and safely stored in blocks of data known as Blockchains.
Note: This is a purely informational article, that is meant for educational purposes only. Our goal is to aware people of online security risks, not to breach them. Please do not attempt any illegal activities online that will definitely land you in trouble in the long run for sure. Stay safe.
Are cryptocurrencies really secure?
All the data in a blockchain is recorded as hash functions. This is a data encryption technology that makes it difficult for a cybercriminal to tamper or make a copy of the data.
Besides this data encryption, users are required to complete a 2FA (two-factor authentication) process to complete a transaction.
That said, we cannot ignore the fact that we are living in an era of rampant cybercrimes.
As much storing wealth or transacting in Bitcoins, Monero, Verge, Etherium, or other cryptocurrencies may still be more secure, we cannot rule out the possibility of having users become victims of crypto-frauds.
Table of Contents
Top 5 current security risks of cryptocurrencies:
As is the case with many tech-based products, cryptocurrency holders are exposed to cybercrimes. The most prevalent ones are:
● Phishing campaigns
The user data of a cryptocurrency holder is one of the most attractive targets for a cyber-criminal. Access to a user’s credentials is a straight path to a beautiful reward. Therefore, criminals can exploit all avenues to gain access to valuable user data.
One of the methods used by scammers to access and steal a user’s credentials is through phishing campaigns.
Here, the criminals create fake emails that redirect unsuspecting users to seemingly legit websites.
The fake sites prey on you through data spoofing. Please note that the malicious sites may be crafted to appear very similar to the legit sites that are familiar to you.
The slight differences may trick you into thinking that you have been directed to a legitimate site and before you know it, your cryptocurrency user credentials have been stolen.
● Malware attacks
Since the declaration of COVID 19 as a global pandemic, the number of cryptocurrency-related malware attacks has been on a steady rise.
Experts say that this trend could persist throughout the year.
Cybercriminals are now misusing COVID 19 related misinformation to spread their malicious tools whose sole purpose is to stealing crypto wallets and private keys from cryptocurrency holders.
Crypto stealing malware enables an attacker to tamper with your exchanges or alter your address. If successful, both actions enable an attacker to transfer or redirect your digital coins to his accounts.
Malware attacks are launched in the guise of ‘useful’ but malicious browser extensions in the form of trading bots, fake cryptocurrency calculators, and so on.
● Compromised platforms
Hackers may find a way of injecting malicious codes into the registration platform of a cryptocurrency site. If this happens, the user’s registration information is copied to another server.
This information may be used to impersonate the affected user on a different platform.
If a trading platform does not have the appropriate privacy and security measures in place, it exposes its members to hackers and crypto-theft if the trading platform is hacked.
● Exposure by third parties
While the services of a third-party application can offer you a smooth trading experience, it can also pose a security threat to your cryptos.
Most third-party applications require unlimited access to your data and information.
This sharing of crucial user data with developers of third-party applications poses a potential risk to your crypto wealth. In the event of a data breach, this data can be used to target you with a cyber attack.
● Exposure of private keys
Cryptocurrencies are accessed using a passcode known as ‘private keys’. This key is a hard-to-guess password and is the gateway to your digital coins.
Here is the catch, many people treat this key as any other file in their device.
This is a risky behavior because it leaves your account’s security exposed to anyone who might have illegitimate access to your device.
Why do we have so many threats around cryptocurrencies?
Some of the threats around digital coins continue to thrive because many regulators are still behind by this sophisticated technology.
Governments are yet to come up with law enforcement guidelines for storing and trading cryptocurrencies.
Lack of proper regulation is one of the reasons why over 30% of the trading platforms open up without sufficient privacy measures in place, an action that has exposed hundreds of their subscribers to losses following the Ransomware and Malware attacks.
Another reason is that hackers continue to burn the midnight oil in order to crack the security systems around cryptocurrencies.
They know that if they are successful, the reward is a beautiful compensation for these efforts.
That said, you can still secure your cryptocurrencies by observing some good cybersecurity habits and incorporating some tools.
Below is a highlight of some of the tested ways of staying protected from the various risks associated with cryptocurrencies.
Also Read: The Future of Cryptocurrencies in India
Top 10 Reliable Ways to Secure your Cryptocurrency:
1. Penetration Testing
You can strengthen your guard by scheduling regular cryptocurrency penetration testing.
A third-party security auditor is the best fit for penetration testing.
He steps into the shoe of a cyber-criminal; this helps you to spot out and uncover any existing vulnerabilities.
During penetration testing, the service provider may also exploit any uncovered vulnerabilities within your network system to assess the potential damage should you suffer an attack.
2. Subscribe to a Secure Email Service
A secure email service is an ideal way to keep off phishing scams.
This tool scans through all incoming emails and addresses. With a reliable email service, any malicious addresses, links, or attachments are filtered before getting to your inbox.
Additionally, all correspondences are protected using an end to end encryption. This shields data from unintended recipients who may intercept it while it’s in transit.
3. Subscribing to a VPN Service
Installing a VPN is one of the various ways to make Bitcoin anonymous. A Virtual Private Network (VPN) protects you and your device from online snoopers and spies.
This technology creates a secure tunnel for all your traffic whenever you are on the internet.
For instance, a VPN can hide your cryptocurrency transactions from your internet service provider or any other third-party snooping.
A reliable VPN service enables you to route your internet communications through strategically located servers across the world.
This masks your activities and the real location, ensuring your anonymity for crypto trading.
The private tunnel and data encapsulation keep you safe even when you are on a shared or public network.
All you need is a VPN installed on your device.
4. Store your Private Keys in a Cold Wallet
Storing keys in a cold wallet means keeping them offline.
In this method, the access keys are stored in an offline device. With a cold wallet, all the unsigned transactions are taken offline for signing and verification.
They are then sent back to the cryptocurrency network. Because the crucial signing and verification process happens offline, hackers and malicious programs are left with little data to spy on.
5. Choose Cryptocurrencies and Trading Platforms that Prioritize on Privacy
It would be fruitless to practice good cybersecurity habits but still sign up on platforms with little or no privacy measures in place.
It is vital for a cryptocurrency trading or investment platform to protect its subscriber’s data and wealth.
Unfortunately, and as revealed by homeland security, many trading platforms still have security gaps that expose users to hackers and other cybercriminals.
Lack of ample data privacy and security exposes your crypto coins and account information should the trading platforms be hacked or suffer a data breach.
Extra caution should be exercised while selecting the cryptocurrency or platform to invest in.
6. Using Multi-signature Address
You can also set up a multi-signature address (multi-sig) to secure your cryptocurrencies.
This tool requires crypto holders to input more than one private key to authorize a transaction. To generate a multisign address, you will require at least two public keys.
You will need an additional key signer for every public key that you may require.
For instance, if you want to use a multisig that requires at least 3 of 5 people to approve a transaction, you need to have 5 public keys.
With this tool, a criminal will not be able to tamper with your accounts. Even if he has access to one private key, he will be prompted to input the additional keys.
This makes hacking difficult for hackers and other cybercriminals focusing on stealing cryptocurrencies.
7. Installing an Adblocker
You can also install an adblocker to keep off malicious ads and notifications that keep appearing on the current trading platform or browser and to protect yourself whenever you are surfing the web.
Doing this will lower the chances of malware finding its way into your device.
You also enjoy a smooth experience that is free from annoying ads. Another benefit of using an adblocker is that it helps improve browser speeds.
This allows you to trade without any unnecessary delays and distractions, and without the fear of losing your privacy to malicious ads.
8. Spread your Cryptocurrency Investments
As the old saying goes, it is not prudent for an investor to put all his eggs in one basket.
This wise advice is still relevant in cryptocurrencies. For instance, don’t store all your wealth in Bitcoins because it’s the only popular cryptocurrency.
Diversify your investments in other digital currencies like Etherium and Monero.
These currencies are also doing well in terms of market share.
Doing so protects you from suffering a total loss for whatever reason.
Managing multiple platforms or currencies as required in this strategy might seem tedious and time-consuming but it saves you the volatility of damage when things go wrong.
9. Backup your Access Keys
After buying cryptocurrency, you can choose to store it in a digital wallet or on an exchange.
Either way, you need to keep your access keys safe.
Just like we do with other important data and files that we do not wish to lose, it is prudent to keep a secure backup of your private keys.
Losing your keys means losing your hard-earned cash.
Keep copies of all the relevant cryptocurrency stuff in your hard drive, cloud, or cold wallets.
With this, you can rest easy knowing that you have a backup plan, even if you lose or forget your keys.
10. Use Application and Tools from Known Sources
Refrain from using free tools and applications just because they promise good results. This includes digital wallets and exchanges.
Always remember the all-time investment advice that the cheap can be expensive.
Do your research before choosing a trading tool. Any reliable application tool comes at a price or has positive reviews from other users.
You should also avoid enabling extensions on your browser unless you know and trust their source. If some extensions are no longer helpful, you can consider disabling them or uninstalling them altogether.
There is no doubt that cryptocurrencies are more secure and convenient compared to the traditional methods of carrying out transactions.
Even then, we cannot overlook the cyber dangers that surround this technology. Hackers and other cybercriminals have shown us that they can go as far as possible to tamper with online-based tech innovations.
With very little or no cryptocurrency trading guidelines or regulations in place, crypto holders must always exercise personal efforts of protecting themselves. This includes being very careful when choosing trading platforms and securing their devices.
Crypto wallet access passwords should comprise complex passwords that are hard to guess. It is tempting to use the same password across multiple accounts but do not try that with your wallets or backups.
The consequences can be dire should an attacker succeed in cracking your password on one platform.
Finally, please note the other behaviors that are not necessarily cyber-related but could end up costing you your crypto coins. Purpose to always understand the risks involved before transacting in cryptocurrency.
Always do your homework before making any investment decisions.
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