The Security Dangers of Using Cryptocurrencies in 2020 and Ways to Protect Yourself

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Security Dangers of Using Cryptocurrencies

Introduction

2017 saw a boom in the mainstream cryptocurrency market. Graphics cards were out of stock during the boom. Many companies tried their hands at cryptocurrency (and some failed). Overall, the tech world was thrown upside-down for months.

And while the initial craze over cryptocurrency ended a couple years back, many still invest in it. Bitcoin, Ethereum, XRP: all of these cater to different users and are still making millions. But despite numerous claims that cryptocurrency is 100% secure, there are a few security issues with most types.

3 Current Security Risks Associated with Cryptocurrencies

1. Crypto-Frauds

Scams litter the Internet, and cryptocurrency is no exception. According to The Wall Street Journal, cryptocurrency scammers caused $4 billion in damages in 2019. But how? How could someone scam cryptocurrency?

The answer is crypto-fraud. Crypto-fraud takes many forms: fake websites, fake apps, social media bots, and vice versa. Even your email isn’t safe!

The biggest example of crypto-fraud took place this past month, where multiple celebrities had their Twitter accounts hacked. The hacker used their accounts to tweet out their crypto-wallet, promising users that they’ll be paid double what they donate.

Of course, no payments were made to users, but the hacker made a ton of money. Expect an increase in crypto-related scams for the next few years; cryptocurrency will only become more profitable.

2. Malware Introduced Through Cryptocurrency

But not every crypto-related threat is done through social engineering/manipulation. No, some cybercriminals rely on the tried-and-true method of malware.

Some hackers infect websites and devices with software known as a “crypto-jacker”. A crypto-jacker has one job and one job only: to use your device to mine cryptocurrency. This not only eats up your device’s resources, but can also steal your wallet info if you ever access it.

However, most crypto-jackers only aim to use your device as a miner for insidious purposes. Worst part? Crypto-jackers exist everywhere. Some have even been found to exist on otherwise-innocuous websites.

3. AI-Powered Threats

Cybercriminals have been developing new methods for their crimes through the past two decades, and cryptocurrency is no exception. The latest threat to grace the world of cryptocurrency is one powered by AI.

AI threats threaten many sectors of the tech industry, but nowhere is it more prevalent than in the crypto industry. For now, AI tech only powers existing criminal methods, not create new ones. For example, hackers can use AI to scour the Internet for crypto wallets that lack proper security.

However, it’s safe to assume these criminals will continue polishing their AI for more nefarious purposes.

5 Ways You Can Protect Yourself While Using Cryptocurrency

It’s clear that cybercriminals plague the crypto industry, but what can be done? These criminals hide behind screens and go to every length to make their identity. Plus, the anonymity of cryptocurrency can be a detriment when it comes to tracking a cybercriminal.

Fortunately, there are a few ways to protect yourself and your crypto-wallet.

1. Install a VPN

Virtual private networks (VPNs for short) anonymize your activity on the Internet. They accomplish this by masking your IP address and encrypting your network activity.

Companies and individuals alike use VPNs for ensured security and privacy, and you should too. While Bitcoin gives you financial privacy, having more privacy never hurt anyone.

2. Keep Your Wallet Information Safe

Wallet security proves to be the downfall of many cryptocurrency investors. Crypto-wallets are labelled by a string of letters and numbers (same for the password). This helps the anonymity of each wallet. But what if someone were to find the name and password of your wallet?

You may lose everything in your wallet.

Once you lose everything in your crypto-wallet, it’s hard to find out who did it. So never share your wallet information unless you need the name of it for trading. Otherwise, keep that information locked up.

3. Use a Multi-Signature Address

Crypto-wallets count on keys and authorizations for transactions. To log into a wallet, you need a key. To go forward with a transaction, you need to authorize it. While this sounds fine—normal, even—if someone were to access your wallet, they could create many transactions without your permission.

Avoiding this is as easy as setting up a multi-signature authentication for your wallet. A multi-signature authentication requires multiple users to sign off on a transaction before it moves forward. This works similarly to two-factor authentication.

4. Stick With Reputable Cryptocurrencies

Dozens of forms of cryptocurrencies litter the industry, but not all of them are reputable. Cryptocurrencies such as Bitcoin, Ethereum, and XRP have proved reputable. However, lesser-known or newer cryptocurrencies may prove disreputable.

These cryptocurrencies may not operate in a functional way, may be laced with malware, and vice versa. Be sure to stick with reputable cryptocurrencies instead of newer, unproven ones.

5. Only Use Wallets From Reputable Vendors

Speaking of reputability, let’s talk about crypto-wallets. There are dozens of wallets out there, but only a few offer the necessary security and privacy needed for cryptocurrency.

Trusting your cryptocurrency with a disreputable wallet can have cataclysmic results. You could lose all of your cryptocurrency without knowing what happened to it all. A hacker will have an easier time breaking into an unsecure wallet.

Sticking with a reputable cryptocurrency wallet is vital to keeping your funds secure on a platform littered with hackers.

Writer’s bio:

Amy Cavendish

Amy Cavendish is a content strategist at the TechFools, a tech blog aiming to inform readers about the potential dangers of technology and introduce them to the best ways to protect themselves online. As an outspoken advocate for digital freedom, Amy is dedicated to empowering her readers to take control of their digital lives with her thought-leadership articles.