What You Need To Know About Digital Currency Security
Last year, the value of the major cryptocurrencies, led by Bitcoin, increased by over 2,000%, leading many investors to believe that digital currencies were truly the investment asset class of the present and future.
However, there are many factors which have weighed on the minds of cryptocurrency traders and long-term investors this year such as future regulations, security issues, and real-world applications of digital coins. In fact, many of these factors are what caused the recent meltdown of cryptocurrency value at the beginning of 2018.
While many cryptocurrency experts feel that regulation is key to legitimizing the digital currency markets, the security issues still pose a problem for them when theorizing about digital coin-based assets and their long-term standing as the future of investing/trading.
Japanese Theft
One of the biggest events that shook the digital currency world as of late, was the $500 million robbery of a leading Japanese cryptocurrency trading platform by online hackers.
This particular incident, along with other smaller scams and hacks within the past year or so, has left traders with a sour taste in their mouth when it comes to the security of digital coin storage and trading.
Where To Store Crypto Coins
Even though cryptocurrencies were designed to be safer than their physical counterparts like cash and coins, the truth is that virtual money is extremely vulnerable to those who know the ins and outs of the digital landscape (i.e. hackers).
This very fact is why it is not a good idea to store one’s digital coins in any cloud-based format that is easily accessible to hackers. This includes any web-based app or network-based computers.
As the nature of cryptocurrencies is to give sole-ownership to the holders of the coins, whoever has them is the owner even if they acquired it by legal means. What is more, as no current regulation designed to stop or catch hackers from invading a web-based wallet, once the coins are gone, there can is retrieving them or reimbursement of any kind.
Security Measures
While digital currency wallets are not considered the safest places to deposit your virtual coins, at the moment they are pretty much all digital coin investors have got. The good news though is that as a digital coin investor or trader, you can take certain measure to limit your exposure to hacks and thefts and make your digital currency wallet more tamper-proof.
The following list gives security measures to increase the likelihood of keeping your cryptocurrency holdings safe and secure.
Change passwords for your wallet frequently.
Use various authentication processes to access your digital coin wallet – email verification, mobile verification, and password questions whose answers are only known to you
Store your cryptocurrency key (used to access your coins, balance, and other important wallet information) on a secure hardware and then store it physically in a safe place like a bank deposit box.
Anyone Can Steal Digital Currency, But No One Can Cash It In
The irony of the main security feature of digital coins is that even though hackers can infiltrate wallets and cryptocurrency exchanges and actually steal digital coins, they can not really cash them in without being caught.
Cryptocurrency blockchain ledgers involve a lengthy approval and verification process that makes it almost impossible to pass if you are not the true holder of the coins. This in and of itself is a security feature that deters many “crypto-hackers” from stealing digital coins as they will most likely never be able to prove it’s theirs and cash in on their theft.
Considering the measures that can be taken to secure one’s digital currency wallet and the inability to cash in on stolen coins, should give many investors the feeling that the security threat of digital coin theft is not that big of a threat after all.
Source: Analyst of Finance – What You Need To Know About Digital Currency Security
