Addressing Cryptocurrency Trading Security Issues
Cryptocurrency trading has been gathering pace over the past few years and has been compared to the American Wild West.
Early adventurers have faced tremendous risks in terms of extreme market volatility, short-lived start-up ventures and phoney exchanges. The business is still largely unregulated and reports of multi-million dollar hacks are commonplace.
Nevertheless, there are still plenty of investors willing to play this high-stakes game in the hope of finding a fast route to riches. Around two million new members are joining the world’s biggest cryptocurrency exchange every week and the market is tipped to reach $1 trillion this year.
A lot of work is going into to make things more secure. For example, cryptocurrency trading is not anonymous. So if you want your dealing to remain private or happen to live in a country where cryptocurrency trading is banned then using enterprise-class virtual private networking (VPN) software is a good place to start.
New Wild West
Trading in virtual currencies is booming. At the start of April 2018, more than 1,500 cryptocurrencies were listed on the CoinMarketCap website. Some of these have brought investors phenomenal gains.
The original and best-known is Bitcoin. Worth no more than a few dollars at its time of launch, Bitcoin today is valued at thousands of dollars.
Now more than ever, where there’s financial technology – especially if it’s online, successful and in the early adoption phase before security measures have matured – cyber criminals move quickly to exploit any weaknesses.
The cryptocurrency business has already become a top target for distributed denial of service (DDoS) attacks. According to report authors Imperva Incapsula, 73.9% of all bitcoin exchanges were subjected to DDoS attacks in Q3 2017.
Indeed, levels of speculation and lawlessness are so high that it has led some to liken the industry to early Wild West America.
Growth Stays Strong
The attendant dangers are well-known yet appear to have done nothing to diminish crypto’s gold rush fever.
In January 2018 Binance, the world’s largest cryptocurrency exchange, grew by 240,000 members in a single hour after lifting a temporary ban on new registrations following high demand. Total market capitalization of all cryptocurrencies is around $400 billion, around 50% down on levels at the start of this year when a major cryptocurrency sell-off took place.
In spite of it all, interest levels in cryptocurrency trading remain buoyant leading some market experts to predict market will reach a total value of $1 trillion by the end of 2018.
In recent months there have been a series of reports of hackers successfully stealing bitcoin. In one example, cyber criminals stole around 4,700 bitcoin valued at approximately $80 million from NiceHash, a leading Bitcoin mining service.
This may be one of the largest hauls to be recorded so far but the same BBC report cites five others from 2017 - a testament to the fact that digital currency has a serious problem with cyber attacks.
According to Gartner, more than 980,000 bitcoin, equivalent to $15 billion, have been stolen from exchanges around the world since 2011. The vast majority has never been recovered and investors have been left without compensation.
Many exchanges are inherently insecure and users playing the virtual currency lottery must do so at their own risk.
Addressing Security Issues
Experts agree that attacks on cryptocurrency exchanges are set to continue. Traders are advised to make sure they do all they can to protect themselves – not just in terms of basic IT security but also to be wary of malicious insiders or compromised third parties who might also have access to their virtual assets.
Many security startups dedicated to blockchain and cryptocurrency challenges are entering the market. These will take time to mature.
However, there is one security measure that anyone can take right away. Professional virtual private network (VPN) software is a proven way to shield your Internet activity from the unwelcome attention of outsiders.
VPNs encrypt all communications passing across remote connections ensuring sensitive data – a virtual currency transaction for example – remains secure.
In summary, cryptocurrency trading is risky enough without additional cyber security dangers. First generation exchange systems are susceptible to cyber attack.
A crucial first step towards protection of valuable information passing over the Internet is data encryption. Encryption keeps sensitive data private by preventing content being observed by unwelcome outsiders.
Professional VPN software is an established way to encrypt valuable and confidential communications affording your trading activities a degree of anonymity.