Cryptocurrencies are meant to protect users from fraud due to their decentralized and anonymized transactions, but this type of currency can still be vulnerable to certain types of fraud, scams or risks. Here, the cybersecurity and digital forensics experts at Atlantic Data Forensics discuss some cybersecurity considerations cryptocurrency traders and users should implement when buying, selling, trading, storing or accepting cryptocurrency.
Choose a “Physical” Wallet to Store Your Cryptocurrency
While you will likely utilize a cryptocurrency exchange to buy, sell or trade cryptocurrency, it is advisable to move your cryptocurrency to a “physical” wallet once you have purchased or traded for it. Exchanges are vulnerable to hacking and other scams, and some exchanges have even permanently lostusers’ cryptocurrency. Withdrawing funds in your exchange to a wallet, which can be stored on the hard drive of your computer or a flash drive, will allow you to secure your funds and minimize risk of hacking or loss. Treat this wallet as you would a physical one: designate a hard drive or flash drive for the sole purpose of wallet storage, and keep secure in a safe or other secure area.
Only Keep Fluid Access to Assets You are Willing to Lose
If you must keep some of your cryptocurrency on an exchange for trading or selling purposes, only store small amounts that you are willing to potentially lose. Choose reputable exchanges that have a positive reputation and a history of security.
Implement Everyday Online Security Practices
As with any other type of valuable online data or information, protect your cryptocurrency with everyday online security practices. Make sure your firewall and antivirus software is up-to-date and use a strong password to safeguard your accounts or cryptocurrency wallet. A strong password is one that uses a combination of uppercase and lowercase letters, numbers and symbols. Passwords should be at least 8 digits long and should not include your name, date of birth or social security number.
You may also want to consider enabling two-factor authentication, which requires you to provide your password and a PIN number provided to you via email or text message. This will make it more difficult for others to access your accounts or wallets.
Avoiding public WiFi is another practical strategy for safeguarding your cryptocurrency. Hackers can collect data from public WiFi, including your password and even direct your browser to a page created to mimic the exchange you utilize. If you must use public WiFi to access your exchange or wallet, use a virtual private network, or VPN.
Use Your Best Judgement
Finally, use your best judgement. Buying, selling and trading cryptocurrency has inherent risk, just as buying, selling and trading any other asset does. Do not divulge to strangers how much cryptocurrency you own. Use a skeptical eye when considering which exchange you use to buy, sell or trade cryptocurrency. Avoid scenarios that seem “too good to be true,” such as “pump and dumps,”where a group of individuals rapidly and artificially inflate the value of a cryptocurrency by sharing false or misleading news about it, and then quickly sell their shares of the currency once the price has skyrocketed. Only buy or trade the amount of currency you are willing to potentially lose.
Talk to a Digital Forensic Expert to Develop a Cybersecurity Plan
The world of cryptocurrency is a relatively new one, but the cybersecurity practices you should implement when buying, selling or trading these currencies are timetested. While the digital forensic and cybersecurity experts at Atlantic Data Forensics can not provide advice on the buying, selling and trading of cryptocurrency, they are available to help you or your business secure your online presence to help mitigate the risk of hacking, scams or loss of valuable information or assets. To learn more, contact Atlantic Data Forensics today.