As well as having the potential to become volatile, something that we have seen in the past, the question of whether cryptocurrency is secure should be addressed. We know that there is a risk in terms of whether the investment will make a profit or a loss, but what about whether the money you invest is actually safe from cybercriminals?
Again, many assume that cryptocurrency such as Bitcoin is safe and secure, much more so than money kept in a bank, but is it really? We must remember that this is an emerging technology, which could mean that mistakes occur and breaches are made. Let’s look more deeply into this idea.
The Early Days Of Cryptocurrency
Initially, cryptocurrency was highly problematic. It was unstable, constantly being hacked, successful fraud attempts were made, and because of all this, trust in cryptocurrency was not high.
However, things have changed for the better. Today, cryptocurrency uses much more regulated technology. This means more financial institutions accept it, and it means that those buying cryptocurrency can feel safer about the process.
The more acceptance cryptocurrency technology gained, the more secure it became. This was because it was an excellent way to make money so programmers began coming up with their own ways for those interested in cryptocurrency to buy, sell, and store it. This in itself has made cryptocurrency more secure; there are so many different options, and each one is using the most up-to-date technology, so it is harder and harder for any cybercriminal to gain access. It’s not impossible though; that’s the crucial thing to remember.
What Are The Risks Associated With Cryptocurrency?
One can break down the risks associated with cryptocurrency into three points. They are:
● The value of cryptocurrency can decrease quickly
● A cyber criminal could discover your private key and steal your cryptocurrency
● Your private key could be lost, so you no longer have access to your cryptocurrency
For the purpose of this article, it is the second issue that we are going to focus on. It is this kind of security breach that you can, in some ways, do something about. The other two risks can often be out of your control.
Of course, you never actually hold cryptocurrency in your hand. It’s a digital currency which is what makes it popular. You’ll also never hold the private key either; it’s not a physical key, but again, it’s a digital password that will allow you to gain access to your e-wallet where you are storing your cryptocurrency.
If someone were to steal that key, they would have access to any funds that you had gathered, and they would essentially have ownership over your cryptocurrency. They could spend it or transfer it however they wanted to. There is unlikely any way to get that money back either.
To prevent this from happening, some people choose not to use an online wallet at all, and instead, they will store their cryptocurrency on a thumb drive or similar device. However, if this device were to be lost, you would lose all of your cryptocurrency too. You are sure to have heard horror stories about people losing millions of dollars’ worth of cryptocurrency because they disposed of an old hard drive, for example. In this instance, this type of storage method can be even less secure than using an e-wallet.
How To Keep Your Cryptocurrency Safe
Knowing the risks and deciding to invest in cryptocurrency should mean that you have done all the research required, and you know what you are getting into. As long as you have plans in place to keep your cryptocurrency safe, you can minimise the risks massively. Here are some of the things that you can do to keep your cryptocurrency safe:
1. Store your private key in a device unconnected to the internet. If you do this, no cybercriminal will be able to find a way to steal it. You could even keep the information on a separate drive and store that in a safe or a bank’s safety deposit box. These devices can also be encrypted, giving you an extra layer of security. You might even choose to change the letters and numbers and use a cipher (although you’ll need to remember what this is when you come to use it). This is called ‘cold wallet’ storage, and many find that this gives them more peace of mind than an online wallet ever could.
2. For some, the online digital wallet is a much easier option. Yes, there are potential security risks, but they are relatively small, especially when compared to traditional online banking. These online wallets are easy to access, and can be used whenever you want to, unlike the cold wallets that you may need to plan in advance to use. If you go down this route, you’ll need to pick a reputable wallet with no breaches. Research is crucial at this point.
3. Of course, it’s not just where you store your cryptocurrency that keeps it safe, you also need to consider the human element. There is an abundance of cryptocurrency scams setup by cybercriminals who want to gain access to your online wallet and steal your cryptocurrency. This might be done by tricking you into installing spyware on your laptop, clicking a link that looks legitimate but isn’t, or inputting your data into a scamming site. To ensure the safety of your cryptocurrency, everything that you do online should be treated with an element of caution. Always consider links to be dangerous until proven otherwise and never open any attachments unless you specifically know what they are.
Conclusion
Cryptocurrency can, if you do enough research, be an excellent investment opportunity, but it is not completely secure. There is actually no such thing as a 100% secure investment. Due to this fact, it’s crucial that you are fully aware of the different ways to keep your cryptocurrency safe.
For more information and advice, contact us at Gemraj Technologies Ltd. We have plenty of experience in this sector and are ready to assist you in protecting your computer systems and your cryptocurrency.