Cryptocurrencies have been plagued with unfair accusations about being volatile and uncertain. In this article, however, we give you the basics that you’ve been searching for as far as cryptocurrencies are concerned and how you can protect these digital assets should you choose to invest in them.
Owning digital currency is not the same mystery that it used to be about a decade ago. Nonetheless, owners of these digital assets still face risk and instability, as do owners of any worthwhile investment.
Among the reasons why cryptocurrencies become popular is that they are seen to be highly secure because of their decentralized nature and the anonymity that characterizes transactions for which they are used for. These currencies are validated using the transparent and incorruptible Blockchain platform.
However, it is important to note that these aspects of cryptocurrencies do not necessarily make them prone to certain types of simple, time-tested tricks that scammers often use in other areas. For example, a Trojan referred to as CryptoShuffler was used to steal thousands of dollars by preying on PCs and monitoring Bitcoin wallet addresses that found their way in copy-paste clipboards.
Thankfully, there are a few steps that investors in cryptocurrencies can take to protect themselves against these common cyberattacks. In the same way you need to keep your cash out of sight or to hide your jewelry in a safety deposit box, it is advisable to invest some effort in securing your crypto assets.
Although the following measures will not keep you safe from every imaginable cyberattack on your cryptocurrencies, they are certainly a good place to start.
- Make sure all your keys are backed up
It is imperative that businesses and individuals not only protect and create a secure backup of all their private access keys but they should also authenticate the integrity of every single exchange that occurs in transactions in which they take part. This is especially important in the case of peer-to-peer transactions for cryptocurrencies such as Bitcoin, for which the transactions are guaranteed by the protocol.
- Always use a Virtual Private Network (VPN) when undertaking transactions
According to cybersecurity experts, the most effective way of protecting your data when transacting with and holding digital currencies is using a powerful VPN. When you’re connected to a well-established VPN that is secure and reliable, it will be impossible for hackers to even know that you have a cryptocurrency wallet on your device. They will, therefore, have no reason to specifically target your device.
Failure to use a VPN while undertaking transactions involving cryptocurrencies will leave you in a highly vulnerable position in which you stand to lose all your digital assets to theft. Besides hackers being able to obtain your personally identifiable information from an unsecured connection, they can also in the process see all your cryptocurrency trading activities and log them.
In other words, hackers targeting your crypto-wallet can see the amounts you send and receive, in addition to viewing all the details of your social media. All this can lead to them impersonating you to access your digital currency wallet and rob you clean.
- Use separate wallets
It’s wise for owners of cryptocurrencies to have at least two separate wallets: a ‘hot wallet’ for everyday cryptocurrency trading activities and a much-harder-to-reach ‘cold wallet’ for long-term storage. The cold wallet should ideally be located in a device that is not connected to the Internet.
- Make sure your keys are protected
The most important thing as far as our cryptocurrency wallet is concerned is your private key. In the case of Bitcoin, the private key is the only requirement for spending them. In the event that another person gets it, they can spend your Bitcoin.
As a result, many companies make it easy to secure your private key by developing specialized hardware devices tailored for transactions involving digital currencies. You simply plug the device into your USB port and all your digital currencies are stored in a reasonably user-friendly and highly secure way.
How to anonymize your cryptocurrency wallet using a VPN
Here, we’ll use Bitcoin to illustrate the process. The first step to anonymizing your Bitcoin transactions is creating a pseudonym that doesn’t reveal your true identity. This is easier than you think and you’ve done it numerous times before when creating handles and usernames for social media websites.
The most important thing to bear in mind is that the pseudonym should have no link whatsoever to your real-world identity. For instance, you can start by creating a webmail account, a process that doesn’t require you to provide your personal details. These anonymous emails can then be used as the addresses for accessing various cryptocurrency accounts.
The next step is ensuring that no one can use your IP address to track your transaction and determine your real identity. This is where a VPN comes in. When you transact with your VPN turned on. The IP address displayed will be that of the remote VPN server serving as the intermediary between you and the Internet.
Leading VPN providers have thousands of IP addresses from which you can connect and they regularly cycle through them. Using a VPN, therefore, makes it virtually impossible for someone to trace you when you trade or transact using cryptocurrencies.
There is no doubt that cryptocurrencies could potentially completely replace fiat currencies in the not so distant future. When this happens, you don’t want to be trailing behind, which is why you at least need to get started on trading a few cryptocurrencies. Using a VPN and taking the other measures outlined in this article will greatly improve the security of your assets as you engage in trading cryptocurrencies.