Between the mid-seventies and the mid-eighties, Nasdaq’s automated quotations and online shopping were disruptive technologies in the financial markets. Some people, businesses, and governmental organisations are starting to take an interest in cryptocurrency, a new disruptive financial technology. For large corporations and governments, cryptocurrency’s underlying technology, known as blockchain, is of significant interest. In fact, many organisations have started blockchain initiatives to verify the practicality of the technology in helping to speed, secure, and most importantly, accurate transactions.
Fintech’s latest disruptive technology
Cryptocurrency has a bright future, according to past performance. One specific, extreme example of this is how the value of one Bitcoin rose from $280 USD in 2015 to $1,000 USD by the end of 2017, and by the end of the year, it was trading at a staggering $17,000 USD per Bitcoin coin.
However, the currency is also appealing to cybercriminals, who see a rising market for low-hanging fruit, including wide-open security holes. Cryptocurrency holders can find 5 helpful tips in the following sections on how to safeguard their financial and data assets.
Tip: Avoid making public information that you wouldn’t want anyone to see.
Cyberthieves use phone porting to break into people’s phones. Most cryptocurrency users use social media platforms such as LinkedIn, Facebook, or Twitter, to connect with other cryptocurrency investors. Once the target has been acquired, the hacker calls the unwitting investor’s phone service provider and pretends to be a victim, instructing the service provider to transfer the victim’s phone number to their own mobile device. The successful hack of a cryptocurrency exchange now opens the doors for the hacker to infiltrate the victim’s exchange account, reset the password, and abscond with money as desired. The amount of money stolen using this method can be thousands of dollars in minutes.
Tip 2: Make it more difficult for hackers to take control of your account
According to Coinbase’s VP of Operations, Dan Romero, those who need SMS account recovery should turn it off, as it offers another layer of defence against phone porting attacks. A last piece of advice he gives is to use a coin vault and to use two-factor authentication for transferring funds from the exchange. You should exercise caution when speaking about cryptocurrencies in public, especially online, where an investor can be targeted for theft. Ensuring that your cell phone service provider implements all available security measures, such as requiring a passcode to open your account and requesting a “do not port” order for your phone, is also a good idea. The operations VP makes a last, desperate plea to cryptocurrency exchanges, telling them that while exchanges take security seriously, they are not banks and should not be treated as such.
The third tip is to store all of your crypto assets in one basket.
Digital financial holdings should be divided among several exchanges to limit investor exposure in the event of a cyberattack. The security expert adds that investors should keep their cryptocurrency in a cold wallet (one that stores the digital currency offline). By restricting hacking access to investor currency, this limits the hackers’ capabilities. Beri recommends having a separate hot wallet for daily transactions. The best way to compare a hot wallet with a checking account is to think of a hot wallet as an equivalent of a checking account, and a cold wallet as an equivalent of a savings account.
Beware of exchanging your currency unless you know what you’re getting.
Amir Bandeali, CEO and founder of 0x (zero-x), says investors should use centralised exchanges if they have frequent transactions, and he also recommends they use decentralised exchanges when trading tokens on platforms such as Ethereum. Decentralized exchanges, as opposed to centralised ones, only hold the users’ cryptocurrency. The only way for hackers to gain access to investors’ funds is by somehow obtaining the private key of a user.
Another very important tip: Do not forget the basics.
Many investors become victims of hackers because they neglect to implement basic security measures. An investor who wishes to store cryptocurrency on more than one exchange should set up a separate account for each exchange. This approach makes it impossible for hackers to pry into any other sensitive assets if they compromise the account. Furthermore, investors should use strong passwords, and store them securely in a safe place as a hard copy, and the only one with access to this password list should be the account holder.
Those who seek cryptocurrency exploits will be the most aggressive. The cryptocurrency market will be more secure if we can find people to staff the highly important positions that provide investors with tools to prevent unauthorised access to their accounts. The need for cyber security experts who can thwart the attacks of persistent cyber thieves will rise in tandem with the rise in popularity of cryptocurrency.