Cybersecurity Basics for Cryptocurrency Investors
Date: 15 November 2023
The truth about cryptocurrency trading is that it isn’t the get-rich-quick route that many inexperienced people hope and believe it to be. While some people do indeed end up getting rich because of their investments in cryptocurrency, the fact is that it is still subject to general risks and also cryptocurrency threats.
Apart from their volatility, cryptocurrencies are also the main target for cybercriminals out to dupe investors, especially those with little to no knowledge about the field. Without taking the necessary precautions, it’s easy to fall for crypto scams targeting newcomers.
Understanding such risks is important in making sure you get the most out of your investments. It’s easy to jump onto the cryptocurrency bandwagon, but without learning how to keep yourself safe from crypto scams, you will be setting yourself up for failure. Here’s a basic guide to help you determine who to trust and what to avoid in this field:
What Are Risk Elements Traders Should Be Wary Of?
Since the element of cybersecurity risk cannot be completely avoided, traders should at least be wary of what these risks are and how these risks can be mitigated.
A few risks that you should be aware of are:
1. Initial Coin Offerings
As you might expect with nascent companies, initial coin offerings tend to promise more than they can deliver. While there are legitimate ICOs, the vast majority of ICOs tend to lack a business plan or the technology to make good on their promises. Even worse, there are ICOs with poor security infrastructures. Before you dip your toes into cryptocurrencies, find an ICO with a greater security factor.
2. Unregulated Brokers
The sheer number of unregulated brokers and exchanges is alarmingly high. The fact that a lot of new investors think that everyone trading in cryptocurrencies is getting rich makes them highly susceptible to fraud.
Unregulated brokers tend to make bold claims about investors getting rich quickly when in truth, once money is deposited, these brokers make it very difficult for investors to withdraw money, or worse, some may even simply run away with the money. More importantly, these scammers will also steal your data.
3. Automated Trading Systems
You’re bound to encounter a lot of promoters who claim to sell trading bots that are a means to apparently get investors as much profit as possible. While the trading bots themselves function well, the truth here, especially for Bitcoin, is that these exchanges often undergo an expensive withdrawal process.
What’s more, not all of these systems can protect you from fraudsters. Once they get hold of your login credentials through brute force attacks or purchases from the deep web, your data will be at their mercy.
Investors can deal with the risks involved in trading. A lot of these fraudulent instruments can be avoided by exercising due diligence and by taking on reasonable risks only. A few good pointers to keep in mind are:
- Identify a scam when you see one: It pays to know what scams persist in the world of cryptocurrencies. From honeytraps to phishing attacks, scammers will use a wide array of strategies and tools to grab hold of your cryptocurrency wallet. Understanding these threats will help you avoid a possible and financially disruptive breach.
- Do your research: It’s not enough to simply read on altcoin before trading. It’s important to look for other reviews and other sources of objective information before investing. It’s also important to only do your exchanges on legitimate platforms. Ensure that the cryptocurrency platforms you utilise maintain reputable and transparent operations. Even if it’s a website that helps convert Bitcoin to USD, it pays to know if it deserves your trust.