Understanding the Risks of Cryptocurrency and Best Practices for Keeping Your Crypto Safe
As the adoption of digital currencies continues to grow, it is important to understand how to interact with cryptocurrency, the potential risks faced by cryptocurrency owners, and best practices to keep your cryptocurrency safe.[0] With increased investments in cryptocurrency-based devices, investments tied to cryptocurrencies and digital assets, and the sudden rise in Bitcoin’s value, it is important to be aware of the potential threats posed by cybercriminals.[1]
The results of a recent survey* show that a large number of people are unaware of the potential dangers that come with owning cryptocurrency. Despite the increasing fame of cryptocurrency, only 25% of the respondents reported that they were highly or very knowledgeable on the potential risks associated with it; the remaining 23% reported having no knowledge at all. Awareness of these threats decreases with age, with those under 35 being more informed.[1] Respondents cited cyber threats, such as virtual theft and scams, as their primary worries with cryptocurrency, with 27 percent and 26 percent respectively mentioning them as the main issues.[2]
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.[3] In 2022, the SEC issued 30 crypto-related enforcement actions, which is nearly a quarter of the 127 actions taken since 2013.[3] Out of the 30 enforcement actions taken in 2022, 14 were associated with initial coin offerings (ICOs), and over half of those (57%) included allegations of fraud.[3]
In addition to SEC enforcement actions, the report from Cornerstone Research also highlighted the increasing focus on security, as companies look for ways to mine cryptocurrency that use less energy.[4] Application-specific integrated circuits (ASICs) have become increasingly popular, making up more than 43.0% of global revenue in 2021, due to their low energy consumption and quick speed.[4]
In order to maximize the benefits of using cryptocurrency safely, Kaspersky experts recommend creating strong and unique passwords for each of your crypto accounts, avoiding phishing attacks, and not sharing private keys.[2] Additionally, it is important to take into account the threats concerns that vary by region, as in South Africa and APAC countries, crypto-investment fraud and fake apps are major concerns, whereas in Europe, extortion attacks are the issue.[2]
Finally, it is important to remember that cryptocurrencies are treated as property, not currency, and will be taxed accordingly.[5]
0. “The dirty secrets of cryptocurrency explained | Stuff.co.nz” www.stuff.co.nz, 31 Jan. 2023, https://www.stuff.co.nz/environment/climate-news/130736196/the-dirty-secrets-of-cryptocurrency-explained
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
2. “Kaspersky survey: half of users hit by crypto cybercrime, one in four …” usa.kaspersky.com, 31 Jan. 2023, https://usa.kaspersky.com/about/press-releases/2023_kaspersky-survey-half-of-users-hit-by-crypto-cybercrime-one-in-four-unaware-of-crypto-risks
3. “Cornerstone Research: SEC Tightens Cryptocurrency Enforcement” www.prweb.com, 31 Jan. 2023, https://www.prweb.com/releases/cornerstone_research_sec_tightens_cryptocurrency_enforcement/prweb19120222.htm
4. “Cryptocurrency Market Is Expected To Reach around USD 4.25” www.globenewswire.com, 31 Jan. 2023, https://www.globenewswire.com/en/news-release/2023/01/24/2594075/0/en/Cryptocurrency-Market-Is-Expected-To-Reach-around-USD-4-25-Billion-by-2022-Grow-at-a-CAGR-Of-12-2-during-Forecast-Period-2023-To-2030-Data-By-Contrive-Datum-Insights-Pvt-Ltd.html
5. “UK cryptocurrency tax guide: everything you need to know” www.unbiased.co.uk, 31 Jan. 2023, https://www.unbiased.co.uk/discover/personal-finance/savings-investing/uk-cryptocurrency-tax-guide-everything-you-need-to-know
