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- Cryptocurrencies are purely digital currency that, unlike fiat currency, has no physical existence.
- Efforts are being made to make the currency and transaction and mining secure, but there are still some threats.
- Online wallets are more vulnerable to attacks and thus need to be encrypted and backed offline.
Cryptocurrencies are digital currencies and assets that are stored online. And this is why one has to go that extra mile to ensure that it’s stored securely. Recent hacks and attempts to get away with cryptocurrencies have prompted several crypto exchanges to take their security a notch higher.
An example that comes to mind is 2014, when reportedly a whopping 850,000 bitcoins were stolen. This was worth about $450 million back then. So, there you go. If you plan to invest in cryptocurrency or are already an investor, you’d better see safe ways to store crypto.
Why should you be worried about security?
Well, cryptocurrencies are purely digital currency that, unlike fiat currency, has no physical existence. Experts have time and again said that efforts are being made to make the currency and transaction and mining secure, but there are still some threats.
The mining process, as well as transactions, is not fully secure. Colluding users can take advantage of the flaws in the process. Some services provide the facility of an online digital wallet, which can become the target of hackers. Even the exchange service provider can be the target for the attackers.
Online wallets are more vulnerable to attacks and thus need to be encrypted and backed offline. Analysts say that existing backup facilities allow the user to retrieve old wallet files and contents.
Some security measures to look into
Here are some security measures which you may be interested in as a crypto investor:
1. Cold Storage – while many recommend online or digital wallets (hot storage) for cryptocurrencies, be mindful that you want it to be secure as well offline. This is known as cold storage. Offline storage makes it difficult to physically access.
2. Insurance – yup, you can also get your cryptocurrency insured. Crypto exchanges that take security seriously do provide additional insurance for the crypto. If it does get stolen from the exchange, the investor might get his or her compensation.
3. Bug Bounty Program – this encourages independent security experts (ethical hackers) to find system vulnerabilities. There are several crypto exchanges that offer rewards to people to report security weaknesses than exploit them to steal crypto.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
