The Crypto Industry and its Security Challenges

Digital assets made such an enormous breakthrough to the point where crypto has now become mainstream. With this type of popularity comes a lot of responsibility. Despite that, many people today argue that the crypto industry is unregulated, continuing to raise major security issues. Naturally, that’s why crypto brings a lot of mixed feelings and opinions.

As the older generations state that cryptocurrencies are designed only for the younger people, some of the young ones call out crypto for being the internet’s notorious ‘fake money’. So which type are you? To find out more about the truth behind crypto and its security challenges, continue reading this article.

Even though potential crypto investors are interested in the crypto world and are curious to try out investing and earning more in return, some of them don’t believe crypto is safe enough – which is to some extent caused by not knowing what are smart contracts on blockchain or how it handles data security. Since the crypto market is unstable, and the world has seen some disastrous digital currency fluctuations, the lack of stability is a big con. Crypto critics argue that nowadays, the market is filled with new tokens every day. Such a massive market eventually might collapse, losing its value.

The lack of trust in digital assets

Even though potential crypto investors are interested in the crypto world and are curious to try out investing and earning more in return, some of them don’t believe crypto is safe enough. Since the crypto market is unstable, and the world has seen some disastrous digital currency fluctuations, the lack of stability is a big con. Crypto critics argue that nowadays, the market is filled with new tokens every day. Such a massive market eventually might collapse, losing its value.

Ponzi scheme alert

So, what’s the difference between crypto and a Ponzi scheme, you may ask? Crypto-haters claim that the original scheme created by Charles Ponzi himself is more fair than crypto from a social perspective. Even though trading cryptocurrency is unpredictable due to the volatility of the market or the ever-changing regulatory landscape, it’s not a scam.

A Ponzi scheme is also based on a speculative, gambling-like level, but it promises high returns with minimal risk. Ponzi schemes are also known as fraudulent investment scams that generate returns for former inverters with assets withdrawn from later investors. In the meantime, crypto-believers argue that cryptocurrencies are real money-like digital assets used for investments and online purchases, despite not being associated with real cash.

Too good to be true

Crypto attackers are also annoyed by the thought of digital assets being magical overnight investments. As much as we’d like, it’s hard to turn rich by making practically zero investments. According to the majority of people who don’t trust crypto enough to use it, there are many social media personalities and influencers nowadays claiming otherwise or at least promoting cryptocurrency in a very positive manner.

Exit scams and lost funds

Despite all of the benefits described in the positive crypto narrative, more crypto-related scams are being pulled by fraudsters. As per the FTC Consumer Protection DATA Spotlight report, more than 46,000 people have lost more than $1 billion in crypto to various scams. For instance, exit scams are becoming a great challenge for the crypto community because of the severe consequences that they cause.

Exit scams are tied to the people who have the largest crypto wallets. A certain cryptocurrency can profit from such early investors by removing all of their funds from the crypto market. To put it in simple words, people artificially pump up the crypto value by promoting the digital asset, later on getting rid of their personal wallets to dump them onto new investors. This classical ‘pump and dump’ scamming technique is killing the crypto market, at the same time giving hope that it’ll bounce back.

Digital wallets raise security concerns

Where there’s money and value, there are criminals who see a great opportunity to attack. For this reason, crypto wallets are at risk, as many cybercriminals try to use various scamming techniques to steal digital assets. In general, a crypto wallet is a device or an app that stores your cryptocurrency. ‘Hot’ crypto wallets are the software version, whereas the ‘cold’ wallet device would be a USB stick. If you want to take care of your cryptocurrency payment, you need to direct the sender to the address that was issued by your digital wallet.

The main security concern regarding crypto wallets is that you can forget your credentials, and if that happens, it’s basically ‘game over’. Once you set up your crypto wallet, you must choose a password. Then, you receive a generated seed phrase. That’s why in cases when users forget their login information or lose their wallet devices, their assets are lost. Let’s also not forget the classics. Not only forgetting passwords is a huge issue, but the increasing volume of cyberattacks.

The classic cyberattacks

Bad actors are using malware and complex phishing scams to break into digital wallets. For example, malware can scan the network to detect saved crypto addresses on different devices. Once that’s done, the attacker can replace the information with their own wallet address and gain access to the funds. In the meantime, phishing scams trick users into giving up their login details on inauthentic software wallet platforms. That’s why it’s essential not to download any software from suspicious sites, click on unknown links, and use public WiFi when having your digital wallet opened. 

ID verification is changing the game

Nowadays, cryptocurrency exchange platforms use remote identity verification to onboard newly registered customers. This is an effective way to ensure that the user is actually who they’re claiming to be. To welcome a new user, crypto businesses implement AI-powered ID verification software that automatically scans the user’s identity document and reviews their onboarding selfie. The smart, innovative system detects spoofing, scammers wearing masks, or even deepfakes, this way preventing unwanted, dangerous users from using the crypto services.

Final thoughts

When used in a proper manner and with the right safety precautions, cryptocurrencies are ways to invest and earn value using digital assets. Yet, without good cybersecurity hygiene and knowledge about blockchain, it wouldn’t be possible. One thing’s clear. The regulations are getting stricter, pushing crypto businesses to verify their users, this way preventing fraud and safeguarding digital assets.

Work done by a Team Of Security Experts from Cyber Writes (www.cyberwrites.com) - World’s First Dedicated Content-as-a-Service (CaaS) Platform for Cybersecurity. For Exclusive Cyber Security Contents, Reach at: [email protected]