It’s probably not accurate to say that cryptocurrency has gone mainstream—and some would say such a development would be unwelcome—but it is fair to say that the profile of virtual currencies has never been higher, and it is a growing presence throughout global culture.
Cryptocurrency has impacted a variety of sectors, and its presence has been particularly notable in the gaming world, where cutting-edge technology is often at the forefront of developers’ and customers’ minds. In the online casino sector, for example, if you check out a site like Casinotopsonline, you will find an increasing number of cryptocurrency-focused casino sites featured alongside other new technological developments, including Inclave gaming platforms and VR casino experiences.
While many are embracing the promise of anonymous and secure currency use that cryptocurrency appears to offer, there are, in fact, a number of security issues associated with the concept, and using cryptocurrency can lead to risks you may not currently be aware of.
High Profile Security Breaches
Cryptocurrency’s status as a secure modern technology has received several blows in recent years. Back in 2014, the MtGox hack, in which $450 million was stolen from a Bitcoin exchange, highlighted some of the vulnerabilities that exist in cryptocurrency. In March 2022, there was an even bigger attack on the Ronin Network, leading to the theft of $625 million, and in October of that year, Binance suffered a security breach that cost it $570 million.
Crypto Concerns
So, how do security risks manifest themselves in the cryptocurrency world? After all, isn’t this technology, with its decentralized structure, supposed to be more secure than other systems?
In fact, one of cryptocurrency’s biggest strengths—the transparency of the blockchain system—is also a major potential vulnerability. This is because blockchain transactions are stored permanently, which means more information is sometimes stored than users might expect.
The other issue is the use of cryptographic keys. Each person who takes part in the blockchain has a pair of keys. One is a public key, which is effectively a form of address, and the other is a private key, which is basically a digital signature. The use of these keys is often thought to confer anonymity. In fact, it would be more accurate to describe it as pseudonymity.
Transaction history and patterns are often visible and that means they can be studied. Following on from this, it is technically possible for patterns of trading behavior in the blockchain to be linked with individuals, which opens up the possibility of potential security risks.
Crypto Security Risks
So, what are the main threats and how can you protect yourself? Cybercriminals who target cryptocurrency users are extremely sophisticated and will target newcomers and experienced users alike. Below are some of the main threats and guidance on how to counter them.
Impersonation
With an impersonation scam, a cybercriminal will fake the identity of a legitimate company or individual, even creating social media profiles that appear to be real, with authentic logos and images. Once they have established their credentials with a victim, they will often attempt to obtain login details, personal ID documents, or 2F identification codes—sometimes by claiming these are verification checks. They can then use this information to steal your identity or personal information.
The best way to guard against this risk when you are dealing with any cryptocurrency company is to double-check that you only interact through official channels and that all social media accounts are verified. Look out for official links, consistent use of branding, and badges of verification.
Hacking
Sometimes, cybercriminals will attempt to access your digital wallets, where your cryptocurrency and personal information are stored. There are many techniques they can employ, ranging from brute force hacks based on guessing weak passwords to exploiting software security gaps. Once they have gained access, they will control your funds and your personal information, and it will be virtually impossible to trace their identity and location.
You can limit the risk of hacking by using hardware rather than software wallets, which keep your private keys offline and invulnerable to hacking. Other steps you can take include setting up 2F authentication on all your accounts, keeping your antivirus and security software updated regularly, reviewing all account activity, and using intrusion detection systems to immediately identify any hack attempts so that you can take steps to reinforce your security.
Phishing
The classic phishing attack involves the sending of emails or messages that appear to be from legitimate cryptocurrency exchanges or financial institutions. These often include attractive offers or claims of urgency to induce victims to hand over private keys or other sensitive details, sometimes by asking victims to click on a link within an email.
There are several ways to guard against the risks posed by phishing. Before you click any link in an email, make sure that you check whether the email address of the sender and the link URL are authentic. Never share personal information on any online channel and ensure that you have 2F authentication set up across all of your crypto accounts.
It is also a good idea to read up on common or new phishing techniques so you can be forewarned.
Ponzi Schemes
The lightly regulated world of cryptocurrency attracts many fraudsters, and it can be all too easy to fall victim to a range of fraudulent schemes. One of the best-known is the Ponzi scheme, sometimes known as a pyramid sc]heme. This fraud involves promising high returns on investments, with new investors’ money used to pay off earlier investors. In the cryptocurrency world, this has become a significant problem as people chase the next big currency.
Staying safe and avoiding Ponzi schemes involves using some common sense. If you receive an offer that sounds too good to be true, be wary, particularly if the scheme or program focuses on bringing in new participants. Before investing any funds in any cryptocurrency or platform, do a thorough check of the relevant regulatory compliance and licensing to ensure the operator is legitimate.
Conclusion
Cryptocurrency has many advantages over traditional forms of banking, but it is important to remember that it comes with just as many security risks. Be vigilant and take steps at every stage to protect your investments and your personal data, whether you are a newcomer to cryptocurrency or an old hand.
