Security of Cryptocurrencies

Although cryptocurrencies are exciting and open up many possibilities, they also contain many risks and dangers for the inexperienced. To eliminate some of the risks associated with holding, using and trading cryptocurrencies, the following three basic security principles must be followed. First of all, "protecting privacy" is always the most basic security principle. Due to the nature of the Internet, information can spread very quickly, but this can sometimes be undesirable. Many threats and attacks typically target a large audience and operate as a network. Thus, instead of targeting a single person, anyone who is easily fooled and distracted enough becomes a potential target. However, if you unwittingly make yourself an obvious target by revealing sensitive information, there is a strong possibility that more sophisticated and more focused attacks will occur against you.

Suggestions to consider:

  • Avoid posting, taking into account the risks of bragging about your successful trading series
  • Do not share the addresses you have used before with anyone.
  • Being selective and careful about sharing your balance
  • Strictly avoid sharing information linked to your offline identity
  • Communicate using encrypted communication channels

A few cryptocurrencies at your address have the potential to become much more valuable in the coming years, but there is a possibility that they won't. This is how you can prevent a potential attacker, a distant relative, just jealous stranger or acquaintances from noticing you.

Another important step is “protecting ourselves”. Users of both traditional banking systems and cryptocurrencies can often fall victim to similar frauds and scams. However, there are various factors that put the responsibility on the end user in cryptocurrencies. The first of these is that the system is not based on trust and that the transactions that have taken place cannot be changed.

The banks, which are considered to be trusted entities, have full control of the money in escrow. Banks are subject to supervision and are in communication with each other. This makes it easier to protect against fraud. If you become a victim or really make a mistake while transferring money in your bank account, you can usually request a refund. The banking system allows this. In cryptocurrencies, the situation is the opposite. Once the transaction is spread across the network and verified, it becomes irreversible. Be sure to learn about phishing tactics, find out what keyloggers and other common threats are described in Coinpara Akademi and its blog. Knowing about these dangers helps and benefits you in keeping your cryptocurrencies safe.

Using strong and unique passwords and enabling 2FA protection for your online accounts should be the first steps you should take to raise your overall security level.

You should also remember that you have to protect yourself from yourself because you are human and people make mistakes. Making a typo, sending tokens to a wrong address, or simply making wrong decisions while performing a backup can undermine your security and cause many problems. Everyone has heard the phrase "measure twice, cut once". This phrase is very useful when it comes to using and protecting cryptocurrencies.

Be Your Own Bank

It is recommended that you store your private keys offline to ensure your access to coins and keep your security at the highest level. While exchanges are now more reliable than ever, it is still recommended that you keep most of your balance on exchanges only if you are actively trading. Moreover, similar to money in a bank account, you cannot claim ownership of coins unless you own your private keys and only you have access to them.

For the first time in history, you have the opportunity to own a digital asset in a similar way to owning physical cash or a piece of precious metal. Unlike these other assets, you can back up your cryptocurrencies on a piece of paper and securely access your holdings anywhere in the world.

Of course, storing and protecting your crypto keys involves many dangers, as mentioned in the previous section. Fortunately, tools are available to help you meet these challenges and enable you to take full advantage of new technologies.

The types of cryptocurrency wallets designed to hold your private keys vary in security, ease of use, number of uses, and even accessibility. Evaluate the options thoroughly and choose the one that best meets your needs.

Software and mobile wallets offer a wide range of features and are generally easy to use. The biggest disadvantage in terms of security is that they are connected to very complex and often online environments such as mobile phones or computers. These factors offer many opportunities for viruses and hackers to gain access to your coins, so inexperienced users should only use these tools for smaller amounts of coins.

Paper wallets, which are pieces of paper in which you write your private keys (or those engraved on a piece of metal), are generally known as the safest way to store private keys. But they are difficult to handle and are suitable for one-time use only. Software wallets are best at balance between ease of use and security. These pocket-sized devices keep your private keys offline, protecting them from malware and hackers, but they'll cost you between $70-$200 and require physical confirmation for most actions.

Remember that security is never certain and complete. You should occasionally update your knowledge and periodically check for potential vulnerabilities.