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The rise of digital currency in 2017 saw cryptocurrencies gain new grounds in terms of acceptance and popularity. Many individuals and small enterprises widely accepted digital currencies such as Bitcoins as a means of exchange for transactions, products as well as services. Since 2017, Lots of individuals, as well as investors, mined cryptocurrencies for-profits, with many of them making massive gains as well as losses.
The use of Cryptocurrencies provides lots of advantages for businessmen as well as private individuals. However, these digital currencies were also exposed to hackers as well as malicious individuals. These malicious agents used loopholes in the fledging system to rob traders as well as regular users of their hard-earned funds.
Security Challenges affecting the use of Cryptocurrency
and every technology-driven product and service is affected by one form of security challenge or another. That’s why before investing in any type of digital currency; you must understand the security challenges affecting them. This will enable you to make informed decisions that will help you mitigate any type of risk affecting them.
i. Absence of regulations for trading platforms
Regulations in any business environment help to safeguard the interests of all stakeholders. Regulations ensure that all parties involved in transactions and other business activities follow prescribed guidelines in other to protect the interest of everyone, most especially customers who have invested their funds in the trust of financial institutions and experts.
There was a scandal that broke out in 2010 involving a reputable banking giant Wells Fargo. They were involved in account fraud in addition to other fraudulent activities. However, their fraudulent activities would have gone unnoticed if regulatory authorities were absent.
But in the Cryptocurrency world, the absence of regulations creates a breeding ground for unscrupulous agents and malicious people. Hackers are creating havoc each day in the Cryptocurrency industry. Investors are losing funds to these malicious cyber attacks daily and that’s the more reason the Cryptocurrency industry needs the introduction of proper regulations and regulatory bodies to monitor the activities within the industry.
ii. Crypto Fraud
Crypto fraud is one of the most common types of fraud affecting the e-currency market in recent times. Why scammers find this type of fraud rewarding is the fact that their activities are almost untraceable. This is largely due to the absence of regulations as well as a proper security framework.
Recently, the FBI sent a warning, through a published report that was released recently, to investors in the industry, intimating them about the latest trends and scams hackers and malicious persons were using the rip-off unsuspecting investors.
Some of these types of fraud involved hackers accessing your private computer and smartphone to steal sensitive information, and then blackmailing you to send a specified some to an online cryptocurrency wallet. Many unsuspecting investors fell victim to these attacks. Other types of fraud involve the purchase of fake rewards and other benefits with cryptocurrencies. These are just some of the security challenges affecting the industry.
5 Tips You can use Protect Yourself Against Cryptocurrency Fraud
Despite the security challenges affecting the cryptocurrency industry, there are still methods and tips you can use to safeguard yourself as well as your investment against Crypto fraud. These tips below aren’t exhaustive of the ones available.
1. Only Use Trustworthy and Reputable Platforms
Although this method doesn’t guarantee you 100% protection against fraud, it helps you to reduce your exposure to fraud significantly to a very large extent. Making use of Digital Currency Exchanges (DCE) is almost a sure way to safeguard your investment against fraud. Digital Currency Exchanges enable investors of Cryptocurrencies to move, trade, and store their funds in a relatively safe way.
Also, the DCE enables Crypto investors to easily convert their Crypto funds into conventional currencies (USD, Euros, BPD, etc.). Your success in trading cryptocurrencies safely, largely hinges on the type of DCE you choose.
2. Employ the use of VPN
Every investor in the Cryptocurrency, stock, and the capital market must ensure they have constant access to their trading account. The nature of these type of investments fluctuate from time to time, and certain movements in valuations may require prompt action from the investor to take advantage of such fluctuations or mitigate against potential losses.
You may unintentionally expose your financial and business details if you access important financial activities using a public network. That’s why you must take measures that help you conceal your identities when surfing the web. A VPN will help to keep you anonymous while encrypting your data. So it’s difficult for malicious agents as well as hackers to track your activities, thereby keeping you safe.
3. Enable Strong Password and Two-factor Authentication
You can’t over emphasis the importance of making use of a strong password to safeguard your personal and financial information. A strong password should include several characters that consist of numbers, letters as well as special characters. A strong password should also be at least 10 characters long. The longer your password, the harder it is for hackers to get the right combination.
Two-factor authentication serves as a buffer against hackers that bypass the password security measure. A text or email is usually sent to the phone or email address respectively for users to authenticate their login attempt. Usually, a hacker may find it difficult to obtain all the necessary information to authenticate a victim’s account.
4. Keep your Cryptocurrency in a cold wallet
Cryptocurrencies are usually attached and stored in a wallet, which usually requires a PIN or access code for investors and users to access the contents. As with all internet accessed wallets and accounts, hackers still can bypass all security protocols and access your funds. That’s why a Cold wallet is recommended as a bulletproof measure to prevent unauthorized access to your funds. A cold wallet is a type of e-Wallet that is disconnected from the internet. Without the internet, hackers can’t operate efficiently.
5. Don’t divulge information about your investment activities
Financial information and transactions usually involve sensitive details, and as such, should remain private or between parties involved in such transactions. However, sharing such details needlessly can expose you as a potential target for scammers and other fraudulent persons. Cryptocurrency-related information should even be kept, away from the eyes of uninvolved parties.
The Cryptocurrency industry holds lots of benefits if it can be tapped judiciously and safely. Its introduction was to serve as a digital means where goods and services can be exchanged for electronic funds. The wide acceptance of cryptocurrency can help the government cut down on spending on printing traditional legal tenders. The security loophole in the industry is still a major concern as to why Crypto funds aren’t widely accepted at the moment. However, using the tips mentioned above can help you trade in Crypto funds safely and securely.