How to Stay Safe with Cryptocurrency

Cryptocurrency has earned a reputation for being a ‘safe’ alternative to traditional currency. In many ways this is well deserved — crypto does allow for more secure transactions and its decentralized nature minimizes the risk of corruption.

However, it’s important to remember that nothing is truly safe, and users of Bitcoin and other cryptocurrencies have to be careful in order to avoid falling victim to cyber criminals.

You can even lose money by sending it to the wrong address with no way of cancelling the transaction and returning it. So, dealing with cyber criminals who have many sophisticated tools and schemes to steal your money is a dead-end road.

As Bitcoin, Ethereum and their cousins shoot up in value, this need to be cautious increases too. Being robbed of a single Bitcoin two years ago meant losing a few hundred dollars — today that number would be upwards of $6000.

What’s more, the cryptocurrency market is becoming flooded with new people, often with little experience of trading cryptocurrency and a poor understanding of the risks involved and how to avoid them.

As a result, it’s pretty vital that anyone getting involved in crypto knows the dangers involved, and how to defend against them.

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What are the risks?

The risks of owning crypto are, in many ways, the same as any cyber security risks.

Phishing is one example. These are emails purporting to be from a legitimate source like your bank (or crypto wallet) that demand some sensitive information, like your login details.

Unfortunately, they are not from a trustworthy source, and the info will go straight to an opportunistic hacker.

It’s estimated that a tear-jerking $225 million worth of Ethereum has been stolen in 2017 alone, just through phishing scams.

Some other more traditional threats include computer viruses like Trojan horses. These are malicious programs that enter your computer bundled inside a seemingly innocuous downloaded file like a movie.

One example of a Trojan horse being used to target crypto is the case of CryptoShuffler. This sneaky piece of kit lurks on a victim’s computer and spies on their details — for example stealing wallet addresses from the copy/paste clipboard. This method has allowed the criminals behind CryptoShuffler to steal around $150,000 worth of Bitcoin since 2016.

A writer called Adam Dachis lost $10,000 worth of cryptocurrency earlier this year after hackers gained access to his computer. These kinds of events, where hackers infiltrate personal computers to steal data, are all too common.

Phone-porting is a more crypto-specific tool in the hackers’ arsenal. Phone numbers are a common method of proving ownership of cryptocurrency and using two-factor authentication to send security codes via SMS.

Some hackers trawl the web to find the phone details of crypto owners, and then use these to pose as their victim and access their account. One unfortunate example of this is Cody Brown, who lost $8,000 worth of crypto in an attack of this kind. Ouch.

ICO scams are yet another risk awaiting fresh-faced crypto newbies and more seasoned traders alike. There are, of course, vast numbers of completely legit and trustworthy ICOs out there, but as always there are a handful of bad apples.

These cowboy ICO projects dupe investors into sinking money into them, and then simply take off with it, leaving the investors without their money or any way of getting it back.

There are a wide range of other ways to steal cryptocurrency, and a whole host of high-profile disasters, like the time $460 million dollars worth of Bitcoin was stolen.

With all these threats lying in wait just below the surface of the crypto world, it’s obviously important to take some precautions. Fortunately, these risks can be drastically reduced or even fully eliminated by taking just a few simple steps.

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How to keep your crypto safe

• Keep your computer safe. Simple things like good antivirus software, a reliable firewall, and regular scans can seriously reduce the chances of hackers and Trojan horses infiltrating your machine and online data. Keep on top of your basic security, and half the battle is already over.

• When investing in new ICOs, do your homework. This can involve just checking out the ICO’s website, contacting a few of the team members, and reading their whitepaper. Trust your instincts — a shoddy-looking and poorly explained ICO should be a red flag. If none of this information is available, it’s probably a good idea to move on.

• Be careful with your information. If you receive an email that looks suspicious and is from an address that doesn’t look official — it might be phishing. NEVER provide sensitive information in an email.

Likewise, if you’re using two-factor authentication that relies on your phone details, keep these details private and don’t share them on the internet. Using phones for two-factor authentication isn’t the safest method in the world anyway, and there are plenty of better alternatives.

• Don’t leave cryptocurrency on an exchange for too long. Exchanges are stored online and are vulnerable to attacks from hackers. If you withdraw currency to an online wallet stored on the cloud or another server, try not to keep too much in there, and use multiple wallets when you can.

• Where possible, you should use offline wallets more than online ones. These are wallets stored on a removable device like a USB, or even paper wallets where the information is printed out onto a physical sheet of paper.

These are much safer than their online counterparts because they aren’t vulnerable to hackers — criminals would literally need to raid your home and steal the hardware to be in with a chance of taking your cryptocurrency.

Staying safe with crypto isn’t insanely difficult. Attacks like the Equifax breach this year have shown that nobody’s money is really safe, and cryptocurrency can actually be much more secure than banking.

If traders follow simple security guidelines and are careful with where they store their coins, they can sleep soundly in the knowledge that their cryptocurrency hoard is safe.