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How the rise of digital currencies could affect online security

By Adrian Johansen on 05 Mar, 2019

By the end of the 2000s, most people had heard about cryptocurrency, but few had any idea what it was. A lot has changed since then, with digital currencies having become a popular investment. Huge accounting firms are now offering digital currency to clients. Blockchain technology is reaching into traditional finance and other industries. Cryptocurrency is taxed, too, though many people either don’t realise it or adhere to it.

As more people invest in Bitcoin and other cryptocurrencies, the value of digital currency is increasing. Value isn’t as hotly debated as security when it comes to cryptocurrency, though. People have a lot of questions about whether it’s protected from theft. Today, cyberattacks are incredibly common.

Fraudulent digital currencies

It’s important to know the difference between a decentralised asset which is not controlled by a single party, like Bitcoin and other legitimate cryptocurrencies, and company-issued digital currency, which is under the control of a single party. Before you invest in a new initial coin offering (ICO), do your research. Some ICOs will be regulated, but others aren’t. Fraudulent ICOs are a common way for scammers to take advantage of the public.

If you don’t know what to look for when researching an ICO, consider working with an experienced stock trader who can advise you on which to trade. Traders will have their own watchlist of the currencies that they follow regularly, so they’ll have deeper knowledge of the trends to expect. They also know exactly where to look to keep track of what’s happening in the market.

Poor cybersecurity standards

The blockchain is safe, but it’s not 100% impenetrable. When a firm creates a new digital currency, you can’t know how strict or lax their cybersecurity is. This can affect traceability and the transaction ledger, and it can result in digital currency being prone to cyberattacks or outright mysteriously disappearing.

This is a good argument for diversifying your cryptocurrency portfolio. You may want to take a risk on a new digital currency, but try to focus on digital currencies that have been around longer and are more reliable. Also, digital currencies should only be part of your broader financial portfolio. Don’t forget about traditional investments.

Vulnerable linked accounts

Poor cybersecurity standards also play a role when it comes to your linked accounts. With digital currency becoming increasingly popular, people are using it to shop online. Every time you make a retail purchase using digital currency, you make your cryptocurrency more vulnerable while also exposing all of your other personal information.

It’s common for even top companies to be hacked, which can also expose your information. If you purchased something from one of those companies using digital currency, your wallet could be at risk. Limit online transactions as much as possible, always create strong passwords, and delete old accounts that you no longer use. You may also want to keep up with the latest hacks to know if one of the companies you shop with has been attacked.

Cryptocurrency hacks and theft

The blockchain makes cryptocurrency transactions irreversible. That’s a great security measure when used correctly, but when hackers get into the blockchain and make transactions, it can be detrimental. The network isn’t able to tell the difference between legitimate transactions and those made with coins that have been stolen. Preventing hacks and theft is key to ensuring your organisation’s well-being in the digital age.

There are a number of ways that thieves can hack into the blockchain and steal your digital currency. They can:

-  Access your private key and transfer currency from your wallet to anywhere they want.

-  Pretend to be a digital currency entity and steal your credentials when you use their site.

-  Call your mobile carrier pretending to be you to have your phone number transferred to their account or SIM card.

-  Use malware that replaces your digital currency wallet address with their address.

Keeping your digital currency safe

We’ve already gone over a couple of ways to make smart digital currency decisions and keep your investments safe. Here are a few more tips for improving cryptocurrency security:

-  Store your coins offline on hardware that’s not connected to the internet and keep it locked in a safe.

-  Store your private keys offline and in a separate location from your coin wallet.

-  Only use the websites you trust for exchanges and to access your wallet.

-  Use multiple passwords and multi-factor authentication everywhere possible.

-  Do not talk about your digital currency online or even in the real world.

Since cryptocurrencies aren’t owned by individual parties, there’s a big question of regulation. It’s incredibly difficult to determine best practices and standards for an asset that doesn’t have a single owner. If you’re storing cryptocurrency on your computer, make sure your antivirus software is always updated and don’t give out your data online.