With the first mention of cryptocurrency in a conversation, people often respond with a blank face – it doesn’t mean too much to the average Joe on the street. Images of shady characters who trade on the dark web spring to mind, but thisimage is becoming outdated, and mainly driven by fear of the unknown.
Cryptocurrencies are becoming more mainstream as people learn about them and dabble in buying, trading and holding cryptocurrencies as viable alternatives to the more traditional banking systems, and as more people use them, the number of uses for cryptocurrency increase too, but so do the reported scams. So, how secure is the world of cryptocurrency?
Let’s take things back to basics.
Your cryptocurrency wallet has three keys:
- Public key: when compared to traditional internet banking, this would be your log-in name.
- Private key: this is akin to your password.
- E-mail address: this is the address that is linked to the wallet account, and where people can transfer cryptocurrency to.
However, problems arise with the security of cryptocurrencies because only the private key is needed by spammers to access your funds. You must never share your private key with anyone, and that includes having it in the background of any online communication or even videos that you make. You don’t know who is watching back your film and what they will do with that information – you are essentially broadcasting your bank account details and pin number.
How do you store your cryptocurrency safely?
If you use a wallet provided by your cryptocurrency exchange, you are more than likely in the situation whereby you don’t have access and control of your private keys. This realization may be ringing alarm bells for you. You can easily trade your cryptocurrency through the provided wallet, and yet this ease is at the cost of having limited control over your funds – your funds are kept secure on the trust that the exchange has adequate security to keep your private key safe from hackers. Do you trust an online entity to keep your funds safe?
As daunting as this circumstance first presents, there are methods of protecting your money. Only keep a small amount of money in the cryptoexchange wallet (it’s known as a ‘hot’ wallet) and transfer the main bulk of your funds offline in a ‘cold’ wallet. There are several types of cold wallets available to you, and here are the details of the two most popular:
Having your details written down on good old paper is a very safe way of keeping your details safe; however, you must ensure that the quality of your notes remain stable – fading ink or damaged files will see that you lose your funds. You can always make duplicate copies, but that heightens the risk to your funds’ security. This is hack proof, but not stupidity proof!
Hardware wallets are USB devices that you can plug into your computer. They store all of the information that you require, and because they are only accessed when you need them, they are a secure way of storing your cryptocurrency. If you misplace the device, you can access the information from a unique code that is given to you on setup.
Always review how your funds and data is being stored by companies, whether you are a new trader, an old-timer, or a gamer or sports bettor who likes to place a bet with Bitcoin, ensure that your deposits are kept in cold storage with offline keys for additional security.
Cryptocurrency uses blockchain technologyto securely record all transactions. Think of blockchain as a distributed public ledger where all transactions are recorded and confirmed anonymously. Once information is entered, it cannot be manipulated or altered in anyway. While you do not physically own any tangible assets, any changes to ownership are recorded on the blockchain and timestamped for transparency. For a hacker to attempt to steal from a blockchain, it would involve every single block in the chain being tampered with, and every block that the chain is linkedto. Rather than handing over dollar bills, the transfer is of data, and because it is anonymous and both public simultaneously, it is a decentralized system that is both sturdy and secure.
Hook line and sinker – phishing scams
You will be already familiar with the phrase of phishing. It is when fraudsters disguise themselves as reputable businesses in order to access your data and information. There is potentially big money for scammers to make by tricking people into revealing their private keys, and so you must be vigilant that any communications that you may receive could be from an unscrupulous entity. Here are 3 tips to help you avoid phishing scams:
1. Recognize errors
Reputable businesses will not have obvious grammatical or spelling errors within their e-mails. While phishing e-mails will copy brand logos and use similar URL addresses, there will be discrepancies.
2. Download security software updates
If you keep ignoring , you will not be protected by the latest version of security against recently identified threats.
3. Type directly into your browser
The hyperlinks included in e-mails should never be used to access a site. Take a little more time to manually type in the address – reputable companies will always have the https:// pathway and the icon of a closed lock will show you that it is a secure site.
The blockchain technology used in cryptocurrency is a complex idea to understand fully, but it is the foundation for ensuring that data is protected and secure. While it is currently in its infancy, it will soon be considered the most important technological innovation since the rise of the internet. In short, the world of cryptocurrency is reliant on the humans who use it. Protect yourself by ensuring that companies that you deal with use cold storage for your cryptocurrency and understand that whereas criminals in the past waited for you in dark streets, they now parade as the companies you deal with on a regular basis – a wolf in sheep’s clothing.