The new age of cryptocurrencies
Since the first decentralized cryptocurrency – bitcoin – became accessible to the general public in the 2010s, it quickly rose to prominence. The concept of paying with a virtual money equivalent was an attractive innovation because it could offer lower transaction fees, broader financial inclusion, and enhanced security and transparency.
Most cryptocurrencies work on a blockchain basis. It’s a mechanism that operates on a network of nodes and allows system decentralization. Blockchains introduced a high level of transparency: All transactions and wallet balances recorded on a blockchain are visible to the public. Meanwhile, the person behind the transaction or a crypto wallet doesn’t have to reveal their identity to initiate the exchange. Operating in such a way, the crypto exchange system can provide much more privacy than a typical bank transfer.
With favorable prospects ahead, alternatives to bitcoin expanded the virtual payment ecosystem. This soon resulted in transaction volumes exceeding the blockchain’s capacities. It inflicted the need to develop an additional layer to the exciting blockchain that would allow for more scalability and speed – the Layer 2 protocol was established.
With cryptocurrencies' popularity rising, hackers keep inventing new ways to exploit the system’s vulnerabilities.
Crypto exchange at the hackers’ target
Transparent transactions and more privacy are some major benefits offered for people involved in crypto payment systems. At the same time, these are favorite aspects for hackers to exploit, noticed NordVPN’s Head of Payments Kęstas Saulis.
During his recent discussion with CoinGate 's CEO Justas Paulius, Kęstas Saulis pointed out that infiltrating crypto transactions is a low-risk and a high-reward target for hackers. Because the cryptocurrency market is decentralized, its transactions are fundamentally irreversible: Once crypto miners confirm and log transactions on the blockchain, they cannot be undone.
Hackers didn’t take long to figure out ways to fill their digital wallets with stolen cryptocurrency. Using various phishing schemes, they fake websites and emails, imitating legitimate crypto exchange sites and web wallets. They also tend to intercept communications between exchange participants, change their addresses during a transaction, and redirect the funds to their wallets. And these are only a few examples.
The irreversibility of crypto transactions creates a comfortable environment for cybercriminals to thrive: If a hacker manages to steal your crypto money by moving it within the blockchain, you’ll likely have to say goodbye to your funds forever. Because you can do crypto transactions without providing your personal information, it’s even harder to prove your ownership and claim your crypto money back. Jurisdictional and regulatory actions are also difficult to apply due to the lack of central authority.
Tips to secure your crypto wallet and transactions
The irreversible nature of crypto transactions makes cybersecurity crucial if you want your crypto funds to stay intact. Here are some tips on how you can secure your crypto wallet and its transactions:
- Use strong passwords. Though it sounds pretty basic, a strong password is the first and one of the most important steps to secure your crypto accounts. Create a password that is no less than eight characters long, combining lower and uppercase letters, numbers, and special characters. Always remember to use a different password for each of your accounts.
- Use multi-factor authentication (MFA). MFA can add an additional layer of security to your crypto accounts because, besides the password, it asks for an extra piece of information whenever you try to log in. It can vary from a push notification sent to your phone or your biometric data.
- Beware of phishing attacks and social engineering schemes. The number one cause that helps cybercriminals to succeed is human error. To reduce the risk of falling victim to hackers’ schemes, you should try to stay informed about the circulating phishing and social engineering attacks. You should also never press on any suspicious links or download any unsolicited files.
- Avoid public Wi-Fi. Public Wi-Fi is often exploited by hackers who can easily intercept an unencrypted internet connection or conduct man-in-the-middle attacks. That’s why you should refrain from using unsecured public Wi-Fi whenever possible, especially when accessing your crypto wallets or accomplishing exchanges.
Your best bet to avoid hackers stealing your crypto cash is to stay vigilant of any suspicious activity online and maintain a secure internet connection at all times. That’s where a VPN comes into play.
A VPN and cryptocurrency in tandem
Securing your internet connection with a VPN means bringing another layer of security and privacy to your online traffic. Whenever a VPN is at work, it encrypts your data traffic, which means that if someone intercepts your connection, they would only see gibberish instead of valuable data. A VPN also creates an encrypted tunnel for your internet traffic between your device and the VPN’s server. This feature is crucial when you’re on public Wi-Fi because this tunnel can safeguard your online traffic from potential eavesdroppers and hackers. A VPN also spoofs your real IP address, making you more private online and lowering the risk of third-party snooping.
There are many other ways for a VPN to bring more security to your crypto exchange and safeguard your digital wallet. However, it all depends on the provider and the special features that come with the chosen VPN. For instance, NordVPN’s Threat Protection Pro feature prevents you from landing on malicious websites that could lure you into fake crypto transactions and drench your digital wallet.
If you’d like to know more about how a VPN can sync with the crypto exchange, tune in to the Ask Me Anything session (AMA) with CoinGate’s CEO, Justas Paulius and NordVPN’s head of payments, Kęstas Saulis.
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