Traditional money exchange practices have almost lost essence, especially since the COVID-19 pandemic because of the growing prominence of Bitcoin and cryptocurrency.
The past decade has seen a rise in the use of digital currencies that work on a decentralized network with support from blockchain technology.
It is believed that digital currencies will play a significant role in changing the future of global finance. This will indirectly affect how it needs to be secured in the future.
Such a technology functions independently, without the need for banks, governments, and other intermediaries. This is the reason why it’s affordable and involves no fees.
Companies and individuals are, thus, presented with an opportunity to make fortunes. And that’s precisely why every professional and business should be worried about cybersecurity.
There are several cryptocurrencies available today, and the prediction is that more will be coming each day.
When there is a space to make money, the chances of stealing that money are also high. On the same lines, if cryptocurrency grows, it will build a large pool of cyberattacks for potential cybercrimes.
So, before you invest in crypto, do figure out the correct crypto cybersecurity.
The fact is that cybersecurity is an essential component of the cryptocurrency market to keep the digital assets safe and ensure blockchain transactions aren’t tampered with. This blog will talk about how cryptocurrency exchanges keep their systems secure.
What is cryptocurrency?
Cryptocurrency, an electronic form of a digital asset or money, operates as a medium of exchange. It works on blockchain technology, a secure digital ledger that contains crypto transactions.
This form of electronic transaction works on cryptography to provide additional security while making payments.
Due to the lack of proper business norms and legal structures regarding the management and governance of cryptocurrencies, cybercriminals stand to benefit. Let’s find out how.
The Rise of Cybercrime and Cybersecurity
The decentralization of cryptocurrency offers many opportunities for cybercriminals, who steal funds by hacking into trading platforms.
They have added benefits like when asking for ransom in digital currencies, their identities remain unknown; while conducting an exchange, it’s easy for them to convert cryptocurrencies into traditional forms without ever being discovered.
All types of businesses are susceptible and the ransom is sought in digital currencies as this form of cybercrime is untraceable, and no evidence leads back to the perpetrators.
Cybercrime has become a real threat, with cryptocurrencies spreading across the business world. Below are some common cybersecurity risks that come with investing in crypto.
Cybersecurity risks with cryptocurrency
Following are some common cybersecurity risks encountered while investing in crypto –
Phishing attacks: Today, phishing attacks have become common even outside the crypto world. Usually, hackers use this technique to portray themselves as a representative of a well-known company, such as a crypto trading platform.
They send emails to users and make them click on a suspicious link or push them forward with their login credentials.
Hackers are dependent on phishing scams to get crypto to turn over their digital assets.
Some examples of common phishing attacks that hackers use to take advantage of crypto investors are DNS hacking, Spear phishing, phishing bots, and fake browser extensions.
Illegal trading platforms: Cryptocurrency is still in the developing phase, and new trading platforms are trying hard to gain the trust of users interested in investing in cryptocurrency. However, not all of them are trustworthy.
Customers should invest in these sites carefully and thoroughly check all aspects before investing. Often, fraud happens in front of naked eyes.
Using third-party applications: Often, crypto investors are dependent on third-party applications or software to keep track of their digital assets. It’s common for investors to use crypto tax reporting services, which leads to more cybersecurity risks.
If reports are to be believed, a hacker could successfully steal the data from over 1,000 users after breaking into CryptoTrader.Tax.
The hacker gained access by entering a marketing and customer service representative’s account, which displayed all the details of the sensitive information that put users at risk.
Crypto-malware: Crypto-malware is a type of malware that enables unauthorized users to mine cryptocurrencies by gaining access to someone else’s computer or server.
Hackers will use any one of the two techniques to infect a computer –
- Victims often get cheated by installing malware code onto their computers using phishing-like tactics.
- Cybercriminals try to manipulate website code or ads through malicious activities. When the users visit this site, the code gets activated, allowing hackers to gain access.
Securing cryptocurrency accounts: Users access their digital accounts via a ‘private key,’ mainly a complex password code. Users often store their private keys on their computers which can be an open invite for risks.
And if hackers gain access to the computer, they can use these private keys to log in to the user’s digital account.
As cryptocurrency is not highly regulated, theft of private keys can lead to more significant losses. Investors should remain alert and careful about keeping their private keys out of the hands of hackers, which makes crypto investing riskier compared to traditional investments.
Unregulated cryptocurrency exchanges: No single agency, organization, or governing body owns or handles the production, management, or movement of cryptocurrencies, making it a decentralized entity.
Many believe that the absence of regulation can be advantageous, but it also comes with downsides. Most countries will crack down on cryptocurrency regulations to stop cybercriminals and scammers from attacking.
User Confusion: Because cryptocurrency is still a new concept, it can lead to detrimental outcomes for unbeknownst investors.
Cryptocurrency, crypto exchanges, and blockchain technology are very complex entities. Even seasoned investors find it challenging to understand.
Cryptography exists exclusively on the internet’s ether. Unlike traditional assets such as money in a savings account, cryptocurrency is often less safe and is riskier for investors.
Need for cybersecurity in cryptocurrency
The cryptocurrency world is full of security disruptions and cyber threats. Companies and crypto exchanges that invest in cybersecurity practices often achieve better results on their investments in the long run.
Following are the main benefits of prioritizing cybersecurity in the cryptocurrency world –
Prevents hacking incidents: Most investors, especially those less digital savvy, feel scared of the high number of hacking incidents in the cryptocurrency space.
Also, due to cybersecurity threats such as malware and keylogger attacks, account takeovers are becoming common.
Chances of invading digital crypto wallets occur when digital attackers get access to private keys or seed phrases.
Enterprises can prevent themselves from these threats and eliminate their impact by investing in cybersecurity.
Protects against identity theft: Another way for hackers to steal crypto assets is using social engineering schemes. Text messages, emails, and even phone calls are used to launch phishing scams.
Enterprises can prevent these identity thefts by educating employees and customers about these scams and implementing advanced cybersecurity measures.
Help keep customer’s trust: Frequent hacking incidents and other cyber threats posses a high risk to any company’s reputation.
To keep the trust of customers and partners, it is necessary to streamline cybersecurity control measures to ensure the highest level of protection.
Ensures Compliance: A solid cybersecurity strategy can help meet data privacy and security compliance standards.
The authorized government bodies also need to regulate crypto exchanges. This implies that they need to fulfill quality standards.
Hence, investing in the right cybersecurity measures can prove helpful in streamlining compliance in the long run and help avoid legal issues with certain jurisdictions.
Bottom line
Cryptocurrency is in its growing phase but has shown no sign of slowing down. As it continues to gain popularity, hackers will try to make the best use of tools to target unsuspecting victims.
Investors need to understand the risks of investing in cryptocurrency to prepare better to fend off hackers and keep their assets safe. The tips mentioned above can help protect the company’s assets and avoid losing out on any significant investments in the future.
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