Is cryptocurrency safe?
Jun 18, 2021
Cryptocurrency may or may not be safe, depending on how you use it. Criminals have already stolen $1.4B Bitcoin in 2020 alone, but, while hacking, theft, fraud, and shady trading platforms are cryptocurrency risks we’re all aware of, you shouldn’t let it scare you away.
It’s hard to ignore the bankable gold rush that is cryptocurrency. Bitcoin rose to monstrous highs in 2017, when its worth increased X8 in a single year, turning casual investors into millionaires and now billionaires. Today, half a million people use Bitcoin in a market worth $240B, and it’s obvious to see why.
Are cryptocurrencies a safe investment?
Crypto is not conventional trading. It’s not regulated by the government or central banks, and its value fluctuates rapidly (Bitcoin fell by 74% in 2018, after Ethereum, Litecoin, and XRP made an entrance). From 2021, the Financial Conduct Authority is banning the sale of derivatives that allow retail investors to speculate on cryptocurrency movements.
On a better note, a Silicon Valley employee turned his $3000BTC investment into $2.3BTC million in three years, and Kingsley Advani, a self-backed millionaire, turned his 2012 investment into a seven-figure sum in the 2017 boom and now travels the world as a motivational speaker.
However, trading digital money on an online network creates vulnerabilities that can be exploited by hackers. In the biggest crypto-heist to date, hackers found a security hole in the Coincheck exchange and ran away with $530 million in crypto.
3 biggest cryptocurrency risks
Miners and malware
You could lose money if you got infected with cryptomining malware, which you could pick up if you visited websites that stealthily run cryptomining software or downloaded a file that carries the malware.
After infecting a string of devices with cryptomining malware, criminals will mine for cryptocurrency by using the combined processing power of those infected devices. The more processing power they use, the faster and more profitable the mine. In 2017, the Adylkuzz malware turned 200,000 infected PCs into slave miners, making hackers millions. AdGuard estimates that more than 500 million users and their devices are assisting these operations without even realizing it.
Crypto exchange attacks
Attacks on platforms that deal and exchange cryptocurrencies is another concern. In September 2020, KuCon, a cryptocurrency exchange platform, lost $200 million in a crypto exchange heist. The methods are simple and merciless. For example, in 2017, criminals stole 31,000 phone numbers of Bitcoin users from a Bithumb employee’s PC. The hackers then called and tricked users into reporting their wallet data, helping them steal everything inside.
You can store your cryptocurrency on an exchange platform (but beware of exchange hacks mentioned above) or in an encrypted digital wallet. Your crypto wallet is your online bank account for storing and trading your cryptocurrencies. It contains your private key (private security code for withdrawals) and public key (like an account number). Your wallet issues a unique cryptographic address when processing payments to and from your account.
Your wallet is secured with 2FA, a username and password, and usually a memorable phrase or biometric. While these are great security tactics, your master password or wallet credentials could still be stolen if you write them down or use the same password in other places, instead of storing them in an encrypted format.
Can my crypto get stolen?
- If you use a crypto wallet provider with security vulnerabilities and weak encryption algorithms, or if you store your cryptocurrency on an exchange platform with subpar security.
- If your private key got stolen, it would be similar to losing your debit card with the PIN written on the back.
- If someone bypassed your 2FA and had access to your email or phone, they’d be able to receive the security code used to verify a transaction and empty your wallet into theirs.
- Simple social engineering attacks can also be used, like the one used on KuCoin, so don’t rule out human error either.
How to protect yourself
- Use complicated 2FA methods for your crypto wallet. Also, use a memorable phrase no one could possibly know or find out on social media. Store your passwords with a good encrypted password manager.
- Always use a premium VPN. Don’t access your crypto accounts on public Wi-Fi, because your traffic can be intercepted. Free VPNs use weak encryption and sell your data to third parties to make their money. A premium VPN will protect you while you’re crypto-trading.
- Spread your crypto across several wallets. If one wallet gets hacked, you haven’t lost everything. But, obviously, remember to use different passwords and 2FA for each one. NordPass can remember them all for you, keeping them encrypted and virtually impenetrable.
- Encrypt your files. Why is encryption important? Because if there’s one technical thing that can protect you, it's good encryption. NordLocker uses powerful encryption to secure your precious documents and files against online threats. What’s unique about NordLocker is that, for instance, a document containing passwords is encrypted before it reaches the cloud. That’s important because the staff who run cloud-based services can’t see your files, and that includes the team at NordLocker.
Cryptocurrency is as safe as you want it to be
At no point in human history have people in their teens and 20s had an opportunity to invest in such high-growth assets. A rebellion to traditional finance and unlike centralized banks, tech can now handle your investments and security, which makes using cryptocurrency faster, cheaper, and, in some ways, more secure.
But like anything in life, your security depends on how well you secure yourself. Approach cryptocurrency like a boss, and you’ll have nothing to lose: make sure everything you store online is encrypted, including personal data that can be used to piece together who you are. It sounds tedious, but sifting through your social media or hacking your family members’ accounts is one way hackers collect information to correctly guess your passwords.
Choose premium security and equip yourself with encryption. Try NordLocker for free to securely access and send your most personal files and information. Good security begins and ends with you.
John believes that the best things in life are simple. He uses the same approach when he’s writing about online security. John says that his #1 pet peeve is phishing scams. Ironically, his favorite non-work related activity is fishing.