Protecting Your Cryptocurrency: Understanding the Risks and Best Practices
In the past decade, cryptocurrency has grown from a niche idea to a global phenomenon. It is increasingly becoming a popular form of investment and payment, with major institutions such as PayPal and Xbox now accepting it. However, with its increased popularity, it is important for individuals to be aware of the potential risks associated with cryptocurrency ownership.
The recent survey conducted by Kaspersky revealed that a significant proportion of individuals are unaware of the potential threats faced by cryptocurrency owners. Only 25 percent of respondents felt extremely or very well informed about the potential risks of using it, while 23 percent had no information at all. A decrease in awareness of these threats is seen with increasing age, with those under 35 being more knowledgeable.
Respondents’ top two concerns regarding cryptocurrency were cyber threats, such as virtual theft and scams, with 27% and 26% respectively citing them. Furthermore, 49 percent of those surveyed did not think that current safety measures for cryptocurrency were effective, and 40 percent of current crypto holders did not think existing security systems were sufficient.
Under Chairman Gary Gensler, the U.S. Securities and Exchange Commission (SEC) has sharpened its focus on cryptocurrency lending and trading platforms and decentralized finance platforms. This has led to an increase in the number of enforcement actions brought by the SEC’s Crypto Assets and Cyber Unit, which recently expanded its workforce to investigate securities law violations in the crypto markets.
To maximize the benefits of using cryptocurrency safely, Kaspersky experts recommend the use of strong and unique passwords, avoiding phishing attacks, and not sharing private keys. Additionally, when buying cryptocurrency with digital currencies, it is important to create your own offer. Furthermore, for tax purposes, cryptocurrencies should be treated like shares and will be taxed accordingly.
The defining feature of cryptocurrencies is that they are usually part of a decentralised network that uses blockchain technology. This technology is fundamental to bitcoin’s appeal as it cannot be controlled by any one person or group, unlike a fiat currency such as the US dollar, which is managed by a central bank.
Cryptocurrency is here to stay and with its increasing popularity, individuals must be informed of the potential risks associated with it. It is essential to understand how to interact with cryptocurrency safely and to be aware of the threats and best practices to keep your cryptocurrency safe. The more you know, the more you can protect yourself and your investments.
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1. “Kaspersky survey: half of users hit by crypto cybercrime, one-in-four …” www.kaspersky.com, 31 Jan. 2023, https://www.kaspersky.com/about/press-releases/2023_kaspersky-survey-half-of-users-hit-by-crypto-cybercrime-one-in-four-unaware-of-crypto-risks
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