Nowadays, cryptocurrency has become the favorite topic of every conversation. Regardless of one’s age or profession, people are openly discussing digital currencies and crypto investments.
Hundreds of individuals are using their savings to buy digital currencies for better returns. From teenagers to investment bankers, people from diverse professions are embracing crypto, making it a popular choice.
Honestly, these days, one doesn’t even have to belong to the technology or fintech sector to understand cryptocurrency, and the biggest reason is its ever-growing benefits. Yes, what seemed like a vague concept a few years back is now the most popular investment option.
The introduction of digital currency has changed people’s mindset, and its popularity doesn’t seem to decrease anytime soon. However, where cryptocurrency has helped people increase their wealth, it also involves multiple risks.
In the rapidly evolving landscape of cryptocurrency, one cannot ignore the potential security risks associated with the investment. So, before investing in any digital assets, learn about crypto and the security risks.
Understanding Cyber Security Threats around Cryptocurrency
Ever gone through the news and seen headlines regarding cryptocurrency account takeover ATO fraud investigations, phishing attacks, and hackable crypto exchanges? Well, all of these issues are associated with cryptocurrency investments.
Here is a detailed description of these risks and additional security threats that might put your investment at risk.
- Cryptocurrency Account Takeover
The first and most common cyber security threat is related to account security. In multiple cases, individuals experience an account takeover where an unauthorized individual accesses their wallet or account.
Once a malicious entity takes over your account, they might transfer your currency to other accounts, purchase crypto without authorization, or make exchanges at manipulated rates. Due to the semi-anonymous nature of the currency, retrieving these stolen assets becomes almost impossible.
Thus, be very careful when handling digital currency. From a sophisticated phishing scheme to a malware attack, anything could make you lose access to your wallet/account.
- Unregulated Crypto Exchanges
Another cyber threat to be aware of is unregulated crypto exchanges. A significant risk of investing in cryptocurrency is that it is decentralized, so there is no official overseeing the creation and exchange of this currency.
Since the platforms facilitating crypto trading are inconsistently regulated and lack government involvement, there’s a chance of encountering illegal transactions or falling victim to hacking attacks during transfers.
Companies and individuals have lost millions of dollars in crypto because of these attacks, and sadly, no one can do anything about it.
- Smart Contract Vulnerabilities
Try to learn about the smart contract loopholes because it’s a serious threat these days. If there are any loopholes or bugs in the smart contract of a webpage, a hacker could use it to infiltrate your network and steal funds.
It takes them a matter of minutes to disrupt network operations or manipulate token functionality. The only way to protect yourself from these attacks is by using platforms that opt for smart contract audits.
You could also use your knowledge regarding smart contract codes to understand flaws in the system and find ways to fix them.
- Defending Against Deceptions
There is also a risk of social engineering attacks or what we commonly call defending against deceptions. Hackers try to manipulate people into sharing personal information by falsely impersonating another entity or through false promises.
Inexperienced users, unable to suspect anything, end up sharing confidential information. Thereby becoming victims of a cyber-security attack.
Before sharing personal details, always check if someone is genuine or a fraud. Those offers that seem too good to be true are mostly fraudulent.
- Insider Risks
Also, keep in mind the insider risks associated with cryptocurrency. Some people have privileged access to particular websites, and these people could exploit their privilege by mishandling the digital assets of other individuals.
From a security administrator to the creator of the website, anyone could use their position to steal cryptocurrency from your account or make transactions on your behalf. These activities mostly happen on shady cryptocurrency exchange sites, so be careful of them.
- Rug Pulls
Attackers also use the rug pull method to deceive people by orchestrating token scams. Under this scheme, creators of a crypto project usually encourage individuals to invest in their digital currency and then take off with all the funds. All that is left behind are worthless tokens and empty accounts.
Anyone who experiences such an attack suffers from losses because all their hard-earned money is gone in seconds.
Rug pull schemes are a serious concern within the crypto community because they make people lose their trust in the ecosystem and scare new investors. Sadly, these crimes are increasing, making crypto investments highly problematic.
- Compromised Registration Forms
Most crypto trading platforms have a thorough and secure registration process that helps confirm your identity. Each individual has a unique ID and separate account that is to be used for trading purposes.
Sadly, this registration system become a reason behind data breaches. Hackers inject code into registration forms and gain access to a person’s private details. Later, these details are either sold in the black market or used to create accounts on other platforms.
You would have zero knowledge when someone uses your credentials for trading and other activities.
Increasing Cryptocurrency Security through Necessary Precautions
Along with numerous threats associated with cryptocurrency and digital assets, there are ways to mitigate the risk. Some top-notch methods include:
- Secure Your Private Key
Protecting your account’s private key is also a way of saving your digital wallet from harm. You could do this by keeping your private key in a hardware wallet instead of storing it online.
A hardware wallet is similar to a USB that has your private key details. Whenever you wish to make a transaction, you only need to plug the hardware device into the computer. That way, your key never leaves the device and won’t be stolen.
- Increasing your knowledge of Digital Currency Exchange
Make it a personal goal to gain as much information about cryptocurrency as possible. It includes knowing about private keys, profitable currency options, and prominent security risks. The more information you have, the lower the risk you face.
While you’re gathering information, try making very small investments so that you understand the basics without suffering losses.
- Consulting with an Investment Advisor
If you plan to purchase digital currency or have already made a transaction, it’s necessary to find an investment advisor. These individuals are experts in the matter and can steer you to the right path.
A few advisors even connect you with reliable resources where you can safely buy or sell cryptocurrency. Without a doubt, purchasing cryptocurrency these days is fascinating and difficult. In such times, having a little guidance helps you make a wise choice.
- Trade through a Verified Platform Always
Instead of choosing unreliable websites, prefer trustable options. Always choose one that has access control measures to curb insider threat, opts for smart contract audits for reducing vulnerabilities, and has proper security standards.
If you choose an option that provides no security monitoring and technical support, your trading experience will be a nightmare.
- Focus on Network Security
There is also the use of cryptographic algorithms and network monitoring to make accounts secure. It’s an effective technique that helps authenticate a transaction and makes communication safer.
Under cryptography, a unique hash is generated with each wallet. This hash encrypts the receiver’s information and the amount being transferred during the transaction.
Only the receiver with the authentication key can access the transaction details. With the help of the hashing process, transactions are less susceptible to threats. Using these defense mechanisms, an individual can protect his crypto assets.
Being Confused is Normal
Cryptocurrency is one difficult topic to comprehend. The work behind these terms is complicated, making it challenging for non-technical people to understand everything in one go.
If you’re experiencing a similar situation, you could always get help from the internet or an experienced trader. It might take a few days or even weeks but don’t start trading with incomplete knowledge.
Usually, companies create simplified platforms for users to invest in digital currencies, but again, these platforms are unregulated. Thus, using any online channel for cryptocurrency trading is a risk.
Is Crypto Worth the Risk?
As explained earlier, cryptocurrency or digital currency is a risky business. From having an unregulated platform to cyber threats and crypto theft, several problems come with the investment option, but one cannot regard it as entirely unsafe.
There are preventive measures to ensure that your transactions remain safe and you don’t lose your precious Bitcoin, Litecoins, and other currencies. So, it’s all about how well-prepared you are.
If people invest in secure digital currencies and use proper protection, they can multiply their investments. Where crypto has its fair share of risks, it also rewards big time.
Conclusion
The volatile nature of digital currency makes it a risky investment. Several financial institutions and experts discourage individuals from investing in this option, but people still take the risk.
You could also take the risk, but make it a calculated one to avoid losing your hard-earned money. These tips could help you become aware of threats and prepare against them.
Remember, that it’s all about gathering quality information. With adequate knowledge, your crypto experience will be profitable.
