One of the most prominent features of cryptocurrency is its underlying technology—the blockchain. The blockchain serves as the backbone that powers all cryptocurrencies, allowing for these digital assets to connect to other networks and computers seamlessly.
While there are undeniable security advantages of cryptocurrency, such as its decentralised nature, there are also many security threats within this space.
To combat the risk of phishers and scammers getting ahold of crypto through malicious ways, many innovations are taking place in the cybersecurity space. Let’s take a look at this phenomenon in closer detail.
The Nature of the Blockchain
With traditional currency, a third-party entity controls the dispersion and storage of the currency. For instance, federal reserves and government agencies can control and manipulate the worth of these fiat currencies.
Banks are also a popular way to hold one’s fiat currency, and if your account is tied to negative activity or if the bank goes bankrupt, your balance and account may be in jeopardy.
In crypto, ownership is limited to only you. No other person or entity can manipulate or control the inflow or outflow of the currency placed in that account.
Furthermore, cryptocurrency also runs on a blockchain. The blockchain runs on a distributed, peer-to-peer network that verifies and records transactions made within the space through a consensus mechanism, either Proof of Work (PoW) or Proof of Stake (PoS). This produces an unalterable string of text (a hash) that can be accessed in a public and visible network.
This makes transactions made through cryptocurrency easily trackable, reducing the risk of fraud and making transactions more transparent for people within the network.
A Popular Form of Crypto Security Storage: Crypto Wallets
With traditional currency, safeguarding your money often entails putting it in a bank—which is a private entity that’s, for the most part, a for-profit organisation.
While there are regulations and insurance policies in place to protect consumers from fraudulent activity, this can still leave your money susceptible to the whims of a third-party organisation.
With cryptocurrency, on the other hand, you have the option to keep the assets you own in your own personal wallet: either a hot wallet or a cold wallet.
These wallets offer a level of security that cyber attackers cannot compromise unless they know the password. Cold wallets are the best form of security for crypto.
This type of storage is an offline device, typically a piece of hardware, that can be utilised to store crypto. It can also include offline wallet apps. These wallets are great because they offer maximum protection against cyber attacks.
Hot wallets are digital wallets that are connected to the Internet. Your hot wallet often includes crypto exchange platforms and mobile apps where you conduct frequent transactions and trades.
Hot wallets are much more likely to be targeted by cyber-attacks due to their connected nature. However, the risk of vulnerabilities is still low, and the convenience of putting crypto in a hot wallet still makes it a popular option among traders.
Risks of Cryptocurrency in the Cybersecurity Space
Even with the most extensive cybersecurity measures, hackers and phishers can still gain the upper hand if a user unsuspectingly falls into their trap.
Crypto users need to hold some awareness and be able to identify the common threats in the crypto space. These are as follows:
- Phishing attacks
- Cryptojacking
- Ransomware
- Crypto exchange hijacking
Due to the anonymous and untraceable nature of crypto accounts, cryptocurrency is often the main method used in criminal activities like money laundering, asking for ransom, and other illicit activities.
This makes it all the more vital for crypto holders storing a large amount of crypto to practice safety measures when dealing with their choice of currency.
Is Cryptocurrency Pushing Cybersecurity Forward?
Yes. With the rising prominence of new cyberattack methods, a plethora of cybersecurity measures have been created and pushed to counter these forces.
These innovative measures bring an additional layer of security to the average consumer, and they’re still continuously getting fine-tuned to maintain their utility against the growing threat of more robust cyber attacks.
One such way that crypto exchanges are implementing security protocols in their website is by requiring users to opt in to a Two-Factor Authentication (2FA) protocol. This protects a user’s crypto exchange account from hackers who may have retrieved the user’s password through unscrupulous means.
Another added mode of protection in the crypto space is the incorporation of multi-signature wallets into business transactions. This feature requires two or more signatures to authorise a transaction and release funds, preventing successful illicit activity from occurring in case one of the signatory accounts gets compromised.
Furthermore, continuous software updates are being rolled out to patch vulnerabilities and improve security across crypto exchange networks. This helps in flagging anomalies and blocking suspicious transactions before they occur, particularly if they’re being conducted in a hot wallet or crypto exchange.
How to Protect Yourself Against Cybersecurity Attacks on Your Crypto
Given the unregulated nature of the crypto space, it’s incredibly important to keep a tight grip on your crypto holdings and follow the best methods possible to safeguard your digital assets.
At the end of the day, you’re the person who’s solely responsible for your crypto. Once it’s gone, it’s very hard to retrieve it again.
Here are some habits to follow to maximise crypto protection:
- Transfer crypto to cold wallets
- Enable 2FA in crypto exchanges
- Avoid clicking random links
- Use multi-signature wallets
- Update security software
While there are definite security concerns in the crypto space, there are also comprehensive cybersecurity measures that offer a solid layer of protection to users.
By following the right precautionary measures and keeping your cybersecurity software up-to-date, you can enjoy the benefits of crypto—such as decentralisation and easy borderless transactions—with peace of mind.
We hope these insights help you understand how cybersecurity is evolving in the crypto space.
