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Cryptocurrency 101: Is It Really Safe?

4 min read

Many of us have already heard the term “Bitcoin” or “Cryptocurrency,” yet most people rarely know what it actually means. And it’s no surprise – Cryptocurrency or blockchain technology is quiet on another level of understanding. Even reading about it isn’t easy if you’re not familiar with tech and digital terms. And even though Cryptocurrency is on the rise, many financial experts warn about making such investments as they’re too volatile. So what makes this type of “money” so unsafe in the digital realm? In this week’s blog post, we’re going to delve into the world of Cryptocurrency and all the cyber dangers it might present to its owners or just regular bystanders. 

What is Cryptocurrency, and how does it work?

The obvious answer that pops into the mind is “virtual money.” Well, you’d be right and wrong at the same time. Cryptocurrency and its transactions differ from those of physical money. In this example, let’s imagine that instead of using cash, we’re trading using pictures. In the real world, if you were to decide to give me one of your pictures and I would take it, you would have one picture less, and I would have one picture more. Sounds simple, yes? Now, let’s assume that these pictures are digital. You would send me your picture, and I would receive it on my device. However, this would not confirm my ownership since you may have made copies of that same picture and sent it to others. Or even uploaded on the internet for everyone to see. 

In this case, I’m not the owner of the picture until it’s confirmed. And in the cryptocurrency scenario, this process is called transaction authentication. This is the part where a third party comes in. Cryptominers validate every transaction out there and are part of establishing legitimate owners of the currency exchanged. However, the mining process raises challenges of its own, and not everyone can do it since it requires a lot of computing power. Yet, as the reward of their work, miners receive tokens themselves. 

Another question is – who are those miners? Are they selected people with higher morals and zero capability for corruption? Well, no. Instead of giving one or a few people total power over this technology and giving them means to cheat, – the creators made it public. It means that everyone and anyone with enough computing power and knowledge can authorize the transactions and check their legitimacy as the system is open source. 

Why is it dangerous to trade in Cryptocurrency?

To be successful in your transactions and make Cryptocurrency truly an asset to your portfolio, you have to understand what it is and how it works. And if you think that our earlier description is enough, well, no, you’re not ready to join the ranks of digital millionaires. It requires technical knowledge and sometimes even professional tech or financial consultancy. And then there are the cybersecurity issues to consider and prepare for:

Losing your password code. Every Cryptocurrency is accessible via a “private” key, a complex password that grants access to your user account. No, we’re not implying that you’re going to lose it, yet, many people tend to store them on their computers, putting them in danger of being hacked. And once lost, it’s lost forever, meaning you’re saying goodbye to all your hard-earned Bitcoins. Apart from standard cybersecurity measures, it’d be better to store this key outside of your device – say in a USB, and even make copies of it just in case.  

Anything goes here.  Having no responsible body overseeing all the transactions makes the system extremely vulnerable to outsider attacks. At times these attacks on transactions are successful and make the headlines of popular publications. In banks, all the operations are audited regularly, making sure that there’s no malicious activity. With Crypto, it’s anyone’s game as there are no regulations and processes in place. In fact, as John Gomez, chief executive officer of Sensato Cybersecurity Solutions, once said, “The world of Cryptocurrency is the Wild West.” It means that investment comes with a risk. 

How it may affect the security of others

Ever heard of cryptojacking? What it means is that your computer may be illegally used to mine Cryptocurrency without you knowing it. As we’ve already mentioned, the mining process calls for a lot of computing power, and the requirement grows over time, making cryptomining a severe investment. Yet, hackers found a way around it by making other people’s devices work for them. They can either trick the victims through malware or phishing schemes to load the cryptomining code on their computers or inject a script into ads or websites. Once they’re opened, the script automatically executes. 

What does it mean for you? Well, if one week your Mac performed with lightning speed, with the infection, you may be transported back to the slow goings of the ’90s. However, not all is so glum – you can protect against them by:

Practicing cybersecurity awareness – keep an eye on phishing schemes, malware danger, don’t visit suspicious websites or click unauthorized links. Be smart. And if you want to learn more about what to keep an eye on, look through our blog on most common cybersecurity threats here.

Install an ad-blocking or anti-cryptomining extension on web browsers. Since many of the scripts are delivered through ads, it’d make sense to use an ad blocker and just avoid the danger. Some of them can even detect such scripts on the web.

And the most important thing here is to keep on top of things: don’t go blindly investing in the digital currency because somebody became a millionaire when doing so. Learn about it, first, and make your decision after carefully considering all the pros and cons. 

Stay cybersafe!