Is crypto safe? What to know before investing in digital currencies – Source: securityboulevard.com

The digital currency market is booming, and as security professionals, we must address the crucial question: Is crypto safe?  Following the re-election of former President Donald Trump, Bitcoin—the largest and most popular cryptocurrency—made headlines by reaching an all-time high of $100,000. 

As digital currencies gain popularity, it’s natural for you, your team members, and your family members to grow curious about the new financial trend. However, before diving into the crypto world, it’s crucial to understand the unique safety concerns it brings.

In today’s blog, we’ll review the definition of cryptocurrencies, the security pros and cons of crypto, and how to stay safe if investing in digital coins. 

What is cryptocurrency? 

Cryptocurrency is a form of digital currency that relies on cryptography, a.k.a. coded algorithms, for security. Unlike traditional currencies issued by governments, cryptocurrencies operate on decentralized networks, typically using blockchain technology to maintain a secure and transparent yet private form of transactions.

Cryptocurrencies have historically been viewed as an investment, rather than a form of payment, for most buyers. Users will go to the cryptocurrency exchanges (such as Coinbase), buy a coin (or part of a coin) and hold it in their crypto wallet until they are ready to sell or exchange their currency – This is done in a similar fashion to stock exchanges. 

However, more recently businesses have developed physical crypto credit cards. Users can now shop in-person with cryptocurrency at most locations that accept Visa or Mastercard. Similar to pre-paid debit cards, crypto cards store digital coins and make an exchange when used. These cards have unlocked new use for cryptocurrencies, making them easier to use in day-to-day transactions.  

What is Bitcoin?

Bitcoin is one type of cryptocurrency – and the biggest and most popular cryptocurrency at that. The unique thing about Bitcoin is that they are limited number of Bitcoin. In fact, there will only ever be 21 million bitcoin in the world. New Bitcoins are mined through mathematical problems computed by computers. The amount of Bitcoin mined and interest in the coin, is what determines the price of a Bitcoin. 

The selected scarcity of Bitcoin ensures the coins’ value over time, making them extremely valuable. This value, plus the growing trust for the brand, makes Bitcoin the most popular crypto currency in the world. 

Note: Any other cryptocurrency that isn’t Bitcoin, is called an “altcoin”. 

The security pros of cryptocurrency

Cryptocurrency has introduced several security advantages that attract users and organizations, including: 

• Decentralization – Cryptocurrencies operate on peer-to-peer networks, reducing the risk of a single point of failure, such as a bank hack or collapse.
• Immutable Transactions – Blockchain technology ensures that once a transaction is recorded, it cannot be altered or deleted, minimizing fraud and corruption.
• Enhanced Privacy – Cryptocurrencies offer varying levels of anonymity, allowing users to conduct transactions without exposing personal information.
• No Middle-Parties – The lack of middle-parties, such as banks, reduces opportunities for third-party data breaches.

The security cons of cryptocurrency

Crypto is a great option for anyone looking for private, decentralized investments. But, is that a good enough reason to put your money into digital coins? Here are the cons to investing in cryptocurrency: 

• Irreversible Transactions – If a transaction is made in error or due to fraud, there’s no way to reverse it. This makes scams particularly devastating.
• Lack of Regulation – While decentralization is a benefit, it also means cryptocurrencies operate without oversight, making it easier for fraud to happen, even from major companies like the once-popular, FTX. 
• Vulnerabilities in Wallets and Exchanges – Crypto wallets and exchanges are frequent targets for hackers. Weak passwords, phishing attacks, or compromised platforms can result in significant losses.
• Anonymity Attracts Criminals – The private nature of cryptocurrencies makes them attractive for suspicious activities like money laundering and ransomware payments.
• Social Engineering Risks – Many scams involve fake investment opportunities, phishing attacks, or impersonation of trusted crypto figures.

How to stay safe while investing in crypto

Once you’ve considered the pros and cons of investing in crypto, there are still a few steps any individual or organization can take to stay safe while investing in digital currencies:

• Use Secure Wallets
  Opt for hardware wallets (like crypto USBs) for long-term holdings and keep your private keys offline.

• Never Invest More Than You Can Spare to Lose. 

The poor security of some cryptocurrencies can lead to complete loss of funds, so never invest more than you can spare to lose. 

• Enable Two-Factor Authentication (2FA):
  Add an extra layer of security to your accounts by enabling 2FA wherever possible.

• Research Before Investing:
  Be wary of “too good to be true” investment opportunities and always verify the legitimacy of projects or exchanges. However, know that even “popular” exchanges can go south quickly. 

• Beware of Social Engineering Attacks:
  Be cautious of unsolicited advice, offers, or communications on social media platforms, even from accounts that seem trustworthy.

 Cryptocurrency has revolutionized the way we think about money and transactions, offering security, privacy, and accessibility in ways traditional financial systems cannot. However, these advantages come with risks, especially in the form of cybersecurity threats. By understanding both the benefits and pitfalls of cryptocurrency and following best practices for staying safe, you can confidently explore the digital economy while safeguarding your assets.

Safe investing! 

*** This is a Security Bloggers Network syndicated blog from Click Armor authored by Ryan Healey-Ogden. Read the original post at: https://clickarmor.ca/is-crypto-safe-what-to-know-before-investing-in-digital-currencies/