By Larry Wright
Although the crypto community around the globe is expanding rapidly, this has also given rise to certain security risks and concerns around cryptocurrency all over the world. In this article, we’ll discuss all the possible security threats that cryptocurrency faces today and how those threats can be mitigated.
In the last decade, the crypto market has become one of the biggest financial markets and has made lots of progress in becoming a reputable investment and development medium. This sector is now changing the future of markets like tech and finance. Despite its slow progress and uncertainty in the initial times, the crypto market has now over eight thousand coins in circulation.
Along with the rapid inflow of investment in the crypto industry, the security of cryptocurrency has also come under question. There are lots of hackers and fraudsters looking to take advantage of the anonymous nature of crypto. This is the main reason why the security concerns need to be addressed as soon as possible.
Any type of vulnerability in a cryptocurrency can be exploited by hackers with the help of hacking attempts. Therefore, it is important that we identify any potential threats to crypto security and address those concerns to prevent people from losing their valuable cryptocurrency. In this article, we will discuss some of the best practices you can follow to avoid crypto theft.
Popularity of Cryptocurrency
A cryptocurrency is a virtual form of currency which is protected by its algorithms. Almost all the cryptocurrency in existence is based on blockchain technology. With the help of cryptocurrency, you can do transactions of any volume with utmost ease and without paying huge transaction fees. Moreover, decentralization makes sure that your transaction is not traced or interrupted by any central authority.
While you will need a digital wallet to store cryptocurrency, exchanges are needed to buy, sell and trade cryptocurrency. However, because of the huge economic potential of cryptocurrency, the implications related to the lack of security measures in the case of cryptocurrency are also severe. In this case, one must identify most of the security issues related to the cryptocurrency and address them to make the payment system seamless.
Cryptocurrency and Security
One of the most important questions everyone asks about cryptocurrency is how secure it actually is. However, in order to dig deep, we will have to analyze the underlying technology behind cryptocurrency. In this case, this technology is blockchain.
When transactions take place on the blockchain, it records them in the form of blocks and stores them permanently on itself. There are lots of security measures available in blockchain technology which prevent hacking attempts in the case of cryptocurrency. But we cannot say that blockchain technology is 100% secure. So, it is important to understand how the security vulnerabilities associated with blockchain can affect the cryptocurrency market.
In order to understand the whole concept, you will have to read more about public and private keys used by crypto wallets. A private key is actually the identity of your account, and only you have access to it. It is through your private key that you are allowed to access your cryptocurrency.
On the other hand, the public key acts like your ID on the open blockchain. Anyone on the blockchain can identify you if they have your public key. The public key of your cryptocurrency account also acts like your bank account number. The private key of your account acts as your signature and allows you to access different types of cryptocurrencies stored across different wallets.
While blockchain technology in itself is impermeable, a hacker can trick you into clicking on a link and accessing your crypto account by phishing.
Since cryptocurrency is completely decentralized, anyone in possession of your private key can easily access your crypto wallet without any restriction. So, although decentralization is one of the biggest strengths of crypto, it can be its biggest weakness as well. This is one of the biggest security concerns related to cryptocurrency these days.
Importance of Crypto Security
Since checking attempts have been increasing rapidly in recent times, the search for valuable security measures by cryptocurrency investors has also increased considerably. Since crypto exchanges are the biggest aggregation of cryptocurrencies, they are usually the target of hackers around the globe.
In the past, some of the biggest crypto exchanges in the world had to face successful hacking attempts in which people lost millions of dollars worth of cryptocurrency. Therefore, every cryptocurrency exchange must introduce impeccable security measures in order to keep its users safe from malicious activity.
However, with the increase in security measures, hackers are becoming smarter, and hacking attempts are evolving. Despite all the efforts to increase security and decrease crypto theft, the amount of money stolen by hackers from crypto exchanges around the globe has been increasing every year.
Another big concern is that out of the 21,000,000 bitcoin in existence, around 5 million bitcoins are locked away in individual accounts just because their owners lost the private keys to their wallets. Every year, people lose millions of dollars worth of cryptocurrency to hacking attempts, and this number is only increasing with time.
By reading the numbers mentioned above, one can easily deduce that the importance of good security measures in the case of crypto exchanges is great. Moreover, every cryptocurrency holder should be educated on how they can keep their cryptocurrency safe from hacking attempts.
Biggest Security Threats to Cryptocurrency Holders
Since cryptocurrency is decentralized and cannot be controlled by any authority, its security solely relies on the security measures you take to keep it safe. However, there are still many ways in which hackers can trick you into losing your cryptocurrency. These methods used by hackers can be termed security threats to cryptocurrency. Although all of these hacking attempts are far from being sorted out by exchanges and security companies, you can educate yourself about these attempts and reduce your chances of getting affected by them drastically.
Let’s talk about some of the biggest security threats to cryptocurrency which you should be concerned about.
Ignoring the Need for Security
Cryptocurrency has a strong perception of being full proof; many people think that cryptocurrency security is just a myth. These owners do not have the slightest idea about the number of security threats their digital wallet faces.
However, keep in mind that decentralization does not necessarily mean that you are completely safe and secure. Some of the biggest mistakes crypto owners make are using easy passwords, not using any antivirus, or using an updated version of it on their computer, and sharing their personal information with every person they meet with.
Ignoring the need for the security of your digital wallet can prove to be the biggest threat to your cryptocurrency holdings. Therefore, you should educate yourself enough to keep your digital wallet safe.
Rug-Pull Schemes
Rug-Pull schemes are a relatively recent entry into the field of cryptocurrency, and you need to be aware of this scam. In this scam, a new cryptocurrency is introduced, and a lot of money is spent on advertising it and attracting lots of investments from novice investors.
Moreover, these scams work by initial investors getting rewarded for bringing new investors on the platform. However, what all the participants do not know is that the development team holds a considerable amount of shares of the asset, and once they attract enough investment, they sell all of their shares for bitcoin in one go and then disappear.
After being affected by a rug-pull scheme, investors are left with huge sums of tokens with practically no value attached to them. This causes those investors to lose a lot of money. In order to stay away from this scam, you should increase your knowledge about cryptocurrency security and should do due diligence before investing in any cryptocurrency which is not very popular or is relatively new to the market.
Mismanaging Private Keys
Another big mistake you might make as a crypto holder is mismanaging your private keys. As we have already mentioned above, private keys are a good security feature which provides you with access to your cryptocurrency on any given digital wallet.
Once you lose your private keys, there is no other way of accessing your crypto wallet. Moreover, if you hand over the keys of your crypto wallet to someone else, you are practically making them the owner of your cryptocurrency, and you will no longer be able to access your crypto wallet if you do not have your private keys.
So, no matter what you do with your private keys, do it with utmost caution. Losing your private keys basically means losing your cryptocurrency.
Cybercrime Activities
Cybercrime is one of the biggest challenges to the security of cryptocurrency around the globe. Since technology is making lots of progress these days, cybercriminals are also evolving their techniques to steal cryptocurrency from the digital wallets of individuals all over the world.
Let’s talk about a few popular methods cyber criminals use to steal your cryptocurrency.
Whenever you download files, and especially games from an unrecognized website, they might inject your computer with a mining algorithm which runs quietly in your computer and uses its computing power to mine cryptocurrency. These cryptocurrencies are then sent to a wallet specified within the algorithm without you even knowing. This method is called cryptojacking, and it can make your computer significantly slower and power-hungry.
You might already know about ransomware attacks. They are applicable in the case of cryptocurrency as well. In this type of attack, a hacker encrypts all of the files on your computer and then demands a ransom to return your files unharmed. These days, cybercriminals demand ransom in the form of cryptocurrency. This way, there is no way of tracing those cyber criminals after they run away with your money.
If you have cryptocurrency stored on your computer, you should never use public Wi-Fi. This is one of the biggest security threats to your computer, which is usually ignored by crypto owners. If your computer gets infected by a virus while you are using public Wi-Fi, they can easily gain access to your passwords and log into your digital wallet to steal all of your crypto holdings.
Phishing attacks are also becoming very common these days. These attacks include fake websites and applications intriguing you to click on them and install a keylogging app on your phone. This app then records all of your keystrokes which might include the password you type to access your crypto wallet.
This way, hackers can steal your cryptocurrency without you even knowing. So, avoid any type of fishy links and application files you receive through WhatsApp or other social media channels.
Countering Crypto Security Concerns
Since lots of people around the globe are now attracted to the crypto market, it has become very important to pay attention to the security of cryptocurrency. Especially since cryptocurrency and the Blockchain system are providing a basis for lots of other technologies like NFTs and DeFi, developing new and full-proof security measures have become even more important.
Many crypto-related startups and organizations are now taking valuable steps to develop security methods which will make this technology perfectly safe to invest in and rely upon. But unless those measures are developed, it is your own responsibility to educate yourself and do the due diligence when dealing with crypto.
Here are some useful measures you can take to ensure your own security when dealing with cryptocurrency.
Learn How Crypto Exchanges Work
The first step you should take when you decide to step into the crypto industry is looking at the features of your targeted exchange and seeing how those features work. You can learn a lot about cryptocurrency just by looking at the trade trends throughout the day. Always do lots of research and get ideas from top investors before investing in any type of cryptocurrency.
Security features on crypto exchanges are made for your protection, and you should learn more about them to keep yourself secure. Check out the reviews of your targeted crypto exchange, and see if they are reliable enough or not. Comments from experienced investors can always help you avoid pitfalls.
Never Ignore the Basics
Some of the most basic security features can make a huge difference at the end of the day. For example, the most basic thing you should focus on is the password of your crypto account. You should set a very difficult password and store it in a very secure place to avoid your password from getting stolen.
Moreover, additional security measures like 2 Factor Authentication can make a big difference as well. Keep changing the password of your crypto wallet after a few months, and do not share your password with anyone, no matter what.
Since crypto transactions are irreversible, losing your password effectively means losing access to your cryptocurrency.
Make Multiple Copies of the Private Key
Keeping just one copy of your digital wallet is a bad idea as well. If you lose that one copy, you can permanently lose access to your digital wallet. Moreover, you should never keep your private keys on a system prone to hacking. Even if you’re investing through a company, your private keys shouldn’t be held by the company. However, there surely are a few appropriately secure platforms which allow you to store your private keys with the utmost level of security.
Do Research and Choose the Right Wallet
One of the most basic and initial steps you must take before investing in cryptocurrencies is choosing the right crypto wallet. The type of crypto wallet you choose for your crypt assets also affects the type of private keys you’ll have. Before choosing a crypto wallet, you should carefully review all the features and security measures taken by the company.
The best type of security for cryptocurrency would be a cold physical wallet to store your assets. There are different types of crypto wallets you should learn about as that will help you gain a security advantage over the users who don’t do the due diligence before investing in crypto.
Conclusion
This article explains the security threats related to cryptocurrency these days. These threats clearly suggest that urgent security measures should be taken to mitigate the security threats. By their very nature, cryptocurrency is resistant to hacking since you can’t tamper with the public records to change the ownership details of your account.
In these modern times, hacking attempts are also evolving, and hackers are succeeding in stealing millions of dollars worth of cryptocurrency from crypto investors.
You can also make your crypto wallet secure by learning about a few useful security measures to keep your account safe. As the crypto world is changing and more people are signing up with blockchain-backed platforms, the nature of security threats is also changing, and it is up to the users to ensure their own security.