Since the inception of the premier digital currency, Bitcoin, cryptocurrencies have increased tremendously in relevance. Originally created by Satoshi Nakamoto, Bitcoin was supposed to be a payment system to eliminate traditional banking. In recent times, discoveries have been made that proves cryptocurrencies go beyond just being payment systems.
What you can use Digital Currency For
Digital currency can be used as a store of value. Most large holders of Bitcoin consider the cryptocurrency as digital gold. In fact, Bitcoin was considered the best performing asset of the 2010s. If you purchased Bitcoins with $1 in the early part of 2010, you’d be worth approximately $1 million today.
Cryptocurrency is also considered one of the best forms of democracy today. The blockchain technology, which is behind the creation of Bitcoin can be used for voting. There are crypto projects like Aragon that allow token holders to vote on decisions. Bitcoin miners also display a form of governance by signing newly mined Bitcoin blocks.
Cryptocurrency has a lot more practical uses that can be harnessed by governments and individuals around the globe. However, the crypto space is plagued with several security risks due to its massive market capitalization (around $250 billion as at the time of writing).
Securing your cryptocurrency assets is a long is essential in order to keep thieves and hackers at bay.
Security Risks Surrounding Cryptocurrency
1. Weak Wallet Security
A lot of cryptocurrency wallets are not properly secured and can easily be hacked. Studies done by researches from Edinburgh University showed susceptibility to hacking in some hardware wallets. In fact, some hardware wallets using encryption could still be breached.
The researchers utilized a malware for this purpose. This malicious software was able to hijack communication between the wallets and the computer system.
Cryptojacking is the utilization of malware for the mining of cryptocurrency on individual devices without their owners’ consent. The mining of cryptocurrency creates new blocks which add to a miner’s wallet, hence, increasing the value of that miner.
However, a lot of computing power and electrical power is needed to facilitate mining, leading to hackers finding other sources to mine illegally. The worst part of cryptojacking is that you don’t notice when it’s happening. You’d simply see your electricity bill increasing and your computer slowing down without knowing what’s happening.
3. Numerous Cyberattacks
In 2011 and 2014, Mt. Gox, the first prominent Bitcoin exchange got hacked, with as many as 1.35 million Bitcoins lost in the attack. In 2019, Binance, the top cryptocurrency exchange lost $40 million to a hack.
Bithumb, Poloniex, BitFloor, and Bitstamp are some of the exchanges that have been hacked in the last 10 years.
Securing your Cryptocurrency Wallet
1. Use a VPN
You most likely purchased your cryptocurrency with money, so why not keep it safe? A Virtual Private Network protects you from the numerous threats prowling the internet when you operate your crypto wallet. A secure VPN performs this by hiding your IP address, thereby making you anonymous to anyone attempting to spy on you.
Something as simple as your IP address being discovered could kick-start a chain reaction that would end in the loss of funds from your crypto wallet.
A VPN also protects you from government monitoring. By virtue of its creator, Bitcoin wallets and users are supposed to be anonymous. Provided you don’t use a KYC (Know-Your-Customer) cryptocurrency exchange, you can trade cryptocurrency with full anonymity.
With a VPN, you can ensure your online activity is encrypted even if you’re using a public network.
2. Use an Antivirus and Anti-Cryptomining extensions
One of the most popular ways you can be cryptojacked is through browser extensions. If you use an anti-cryptomining extension, you can stop malware from mining through your system. Also, antiviruses can detect crypto-miners on your system and flush them out.
3. Use Secure Hardware Wallets
Hardware wallets are not connected to the internet, making them free of malware. They are also not affected by exchange hacks or software wallet hacks. Using a hardware wallet will ensure you don’t join a number of victims who have lost cryptocurrency through hacks.
You can use secure hardware wallets like Trezor or Ledger Nano S.
Cryptocurrencies have provided increasing value to the world since creation. It is because of this reason that they are frequently attacked by cybercriminals. To protect your cryptocurrency, you can use an antivirus, a VPN, and a hardware wallet.
Faith Obafemim tech lawyer, digital content consultant, blockchain & crypto researcher, emerging tech tech writer. She is currently doing research on the implementation of the African Continental Free Trade Agreement (AfCFTA) on the blockchain and recommending Kleros as a dispute resolution layer.