We are heading to a time when the cryptocurrency will be universally accepted. The digital currency idea is not new, and many have attempted to create one. The primary issue with all the digital attempts was double spending, until Bitcoin.
In 2008, Satoshi Nakamoto released a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. The paper described the functionality of the blockchain network. From then, there has been no stop in the growth of cryptocurrencies. Hackers do not rest, and keep coming up with ingenious ways to steal funds from unsuspecting individuals. Some of the risks associated with cryptocurrencies include:
- Fake ICOs
ICOs or Initial Coin Offerings are the newest methods that startups use to raise cash to fund their companies without legal bodies. Crypto-based startups create communities using Airdrops, where gifts are offered when you perform tasks such as liking and sharing on social media. Some of these ICOs end up being fake, with thousands of people losing their hard-earned coins.
- Pump and dump
Pump and dump refer to the process of price manipulation by the sharing of fake news to push up the prices. Such channels are found on Telegram, where the pump and dump organizers make calls on cryptocurrencies, asking them to purchase at a particular time of day.
99% of investors who are lured into participating in these Pumps and Dumps end up losing their coins. The 1% who make profits are the organizers who buy a day before and sell-off when the channel members are buying.
- Fake wallets and exchanges
A crypto-wallet is a purse where you can store your digital assets such as Bitcoin and Ethereum. An exchange is where users digitally buy and sell cryptocurrencies. An exchange matches different users’ bids and asks, and fake wallets and exchanges steal your deposited coins.
How to keep your coins safe
You can keep your coins safe by doing the following:
- Keep your private key and recovery phrase secure
By keeping your crypto-wallet key and the recovery key safe, you save yourself from experiencing coin loss. The best way to secure these two is to write them down and keep them tucked away safely. Keeping an offline backup of the wallet keys and recovery phrase ensures that only you can access them.
For better protection, split each into two and keep them in different locations. That way, if anyone discovers one piece, he or she would still need to recover the second to do any damage.
- Use a VPN
A VPN hides your location and IP address by providing you with a virtual location. If you log into your crypto-wallet online using a mobile device, you need to keep malicious actors at bay. The app also encrypts your communication, making it hard for anyone to intercept it in transit. Buying a VPN can avoid making the mistake of subscribing to free VPN services who are notorious for selling user data to third parties.
- Strong passwords
Use strong alphanumeric passwords for your crypto wallet by combining special characters as well. Refrain from using rather apparent passwords such as pets or children’s names.
- Use cold storage
Use cryptocurrency hardware wallets, also referred to as cold storage, to store your coins and other digital assets. Hardware wallets are now widespread in crypto circles by people who want to store their funds securely and offline.
- Disable auto-updates
Disabling auto updates on crypto apps can save you from losing your cryptocurrency. When app updates are released, refrain from updating your app in case the app develops some bugs. Wait a few days, wait for people to use it, and look at the update reviews.
We are headed towards a cryptocurrency explosion. Most establishments will accept cryptocurrency as a means of exchange. The more crypto grows, the more cyber-criminals gain the confidence to steal from investors. Using simple measures such as strong passwords, cold storage, disabling auto-updates, VPNs, and keeping private keys safe are just some of the few ways you can keep hackers at bay.