Cryptocurrencies are, without a doubt, the most revolutionary invention in recent worldwide banking history. Although it may seem like they became popular overnight, cryptocurrencies have been around for years. However, their time to shine came along with the global financial crisis and the waning faith in corporate financial institutions that followed.
People decided to give cryptocurrencies a chance once their trust in banks faded and they realized they would rather control their own wealth and the way that it’s stored. Cryptocurrencies were a viable alternative to traditional money because they come with multiple advantages, making it easy for people to recognize their potential and use them regularly.
However, just because cryptocurrencies aren’t regulated by a single entity, doesn’t mean the transactions are completely anonymous and secure. In addition, the transactions are permanent, which prevents the owner from tracing their coins once they’re gone from the account, giving an advantage to hackers. Many hackers who steal small amounts from different users abuse this and several other security cracks in the system.
Luckily, knowing the right information and having the right tools can help avoid situations like this.
To give you the right information and the right tools, we’ve created this quick guide. It includes everything you need to know about the inherent privacy and security risks associated with cryptocurrencies as well as information on how to enhance the safety of your cryptocurrency transactions.
Cryptocurrency Risks and Concerns
The truth is that digital currencies face some serious security risks and concerns, many of which are lost among the claims of complete security and privacy made by crypto proponents. Aside from their vulnerability to hacking, there are other concerns that everyone looking to get involved with crypto should know about.
Below is a brief rundown of some of the largest risks:
Double Spending – A scam where the attacker uses a single coin to successfully make more than one transaction. This will invalidate all but one of the transactions, but all of the transactions may appear legitimate until a correction is made. Double spending is a very lucrative attack vector for scammers.
Bitcoin Addresses Are Not Completely Anonymous – By connecting the address of a Bitcoin wallet to the IP address of the user, the location and possibly the identity of the wallet owner can be found.
Selfish Mining – This allows the “selfish miners” of a sufficient size pool to gain more cryptocurrency than the standard amount in the pool. In this case, the “honest miners” are wasting their cycles on blocks that will not become a part of the blockchain and will not be rewarded for their efforts.
Fake Trading Exchanges – There are many instances where cryptocurrency enthusiasts participate in exchanges that are not actually legitimate. Thus, you should make sure the exchange you’re using has a good reputation.
Cryptojacking – A situation where your device is hacked and mining software is installed. The device’s CPU is then used to mine cryptocurrency for the hacker, all without the owner knowing. Cryptojacking tools are quickly becoming a prevalent form of malware.
ICO Fraud – This type of fraud is increasingly common, which is why new cryptocurrency startups should be considered with caution. Many of them are legitimate, but there are some fake ones as well. They often very well disguised, so be diligent in your research before investing in an initial coin offering.
How Can a VPN Help?
Virtual private networks or VPNs are commonly used for increasing a user’s online security and privacy. Similar to how the term ”decentralized” is an adjective for cryptocurrencies, you will need a decentralized VPN provider as well. Such a tool will safeguard your online transactions and communications, making you safer in the process.
A VPN works by encrypting your internet connection and routing it through a VPN server before connecting you to the internet. The encryption protects your data from hackers, government surveillance and internet service providers alike while the remote server masks your true location and IP address.
Encryption is key to dealing with cryptocurrencies, so it stands to reason that a VPN is a necessity. If you’re not yet convinced that you should use a VPN for your cryptocurrency transactions, some more reasons are provided below.
- You can trade anywhere in the world if you’re using a VPN. Since they route your connection through a remote server, VPNs have the ability to unblock websites that are geo-locked, even blocked traders can access these sites with a VPN. This is especially relevant if you live inside the USA as most exchanges are blocking access to residents of the USA.
- When trading, the VPN will encrypt your data, making it extremely difficult to intercept.
- Similar to making online transactions with a bank, cryptocurrency trading platforms require you to enter bank details as well as identifying information. A good VPN provider protects this data from third parties and hackers.
- With a VPN, you can avoid government surveillance. The number of financial markets and countries that forbid online cryptocurrency trading is still substantial. Whether it’s legal or illegal online trading, it would be impossible to safely enter the financial markets if a VPN isn’t used.
- VPNs can prevent viruses, malware and phishing attacks.
Hopefully, these points are enough to convince you of the importance of using a VPN when conducting cryptocurrency transactions. There are plenty of other benefits of using a VPN that do not pertain to cryptocurrencies, so you can use them even when you’re not trading crypto.
In your hunt for the best VPN, your primary goal should be to find a VPN provider that has a zero-logs policy. This means that they’ve committed to not storing information about your internet activities. Read the policies of the VPN provider carefully before signing up.
As you look for a VPN provider, you should be sure to stay away from free VPNs. While a free VPN service may be hard to refuse, it may hurt you down the line. Whenever something valuable is given away for free, there’s always a catch. VPN providers that offer free services often generate revenue by selling the data that they’re supposed to protect. To avoid having your information sold, pay for a secure and reliable VPN that will do what it’s supposed to do.
The best place to look to find a VPN for conducting cryptocurrency transactions is Top VPN Software. They’ve done extensive research on all of the VPNs on their site and have ranked them to make it easy to choose. You can read their reviews of each of the VPN providers before signing up to learn the key features that make each VPN different, and they have dozens of articles you can read to learn more about VPNs.
Needless to say, VPNs are one of the best ways to protect all of your cryptocurrency transactions. Even though the blockchain system is transparent, anonymous and secure, it’s also vulnerable to thieves and hackers. Since there’s no such thing as too much security, using VPN services is becoming a more and more prevalent trend. Many people already embrace VPNs not only when handling their cryptocurrency transactions but for other online activities as well.