Cryptocurrency and Data Security

Cryptocurrency is not immune to cyber crimes and we should be every bit as cautious as we are regarding traditional money. But the benefits of cryptocurrency transactions far outweigh these risks and there are robust systems in place to deal with it.

As discussed in an article earlier, cryptocurrencies could be considered a form of digital money, stored and used online. There are over 3000 numbers of those cryptocurrencies and Bitcoin is only one of them. While discussing Bitcoins, we must remember that Bitcoin transactions are irreversible. They are not controlled or regulated by any centralized authorities like any federal governments or central banks, unlike traditional forms of money or currency. However, cryptocurrency and Bitcoins are exposed to cybercrimes, similar to their counterparts conventional money/regulated currency. All the bitcoin transactions are transparent and available to the public even if the people involved are anonymous. Unlike traditional money, Bitcoins are encrypted and therefore secured by default.

There are some risks involved in transacting and handling of cryptocurrencies as they are exposed to various cyber crimes like phishing, malware attack, compromised registration forms, hacked trading platforms, third party applications etc. Due to being unregulated by any government authority or centralized bank of any country, the usage or handling of stolen cryptocurrencies is easier compared to that of conventional money or currency. One glaring example is that it could be used in lieu of ransom money in multiple incidents such as business or corporate ransom. Another threat involved in dealing with cryptocurrency is its high volatility or non-stability which can be demonstrated by the fact that with the absence of regulatory bodies, a $1000 bitcoin can be worth as little as $100 in a matter of days.

While being cautious, we should also realise that the benefits of cryptocurrency transactions far outweigh these risks and there are robust systems in place to deal with it. What you should do for providing yourself with a good degree of safety and security, in regard to handling cryptocurrency is by usual precautions like creating a strong password. This password should be protected properly by storing at a safe place, keeping the secrecy of your stock, anonymity, personal transactions, using a good and effective antivirus software.

A typical cryptocurrency exchange may be holding thousands of Bitcoins belonging to their users. One should be using Cold Wallet for large volumes of their funds and keeping this cold wallet either offline or on an air-gapped computer which is not connected to the internet. This significantly reduces the possibility of an external hacker gaining access to the exchange’s private key. However, the exchange also needs to take precautions to ensure it does not lose the private keys.

Another way to ensure security is by adopting Multisig Wallets. These require more than one key to authorize the transaction. They prevent a single employee in the company from having complete control over the Bitcoins. For such an instance, using a multi-sig wallet would have required additional employees (for example, the CEO and the CFO) to authorize the transaction. These are very effective for corporate usage.

One should also go for Penetration Testing at a regular interval. Conduct a regular security assessment of infrastructural setup with the help of ethical hackers. Look for malicious attackers, and ensure that your company identifies and remediate vulnerabilities in the systems.

Another way is by adopting a fragmented storage space. Majority of bitcoin breaches have happened on exchanges, hence it is important that the owner moves the Bitcoins from the exchange to a self-controlled wallet. Also, the owner should prefer using multiple wallets with different private keys. Choose wallets with good track records, ensuring proper backup.

By keeping these simple steps in mind while dealing with cryptocurrency transactions, one can easily ensure a good degree of data security. For assistance with any cybersecurity services, reach out to Unocoin, today!

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