Blockchain is popular for its security features. What’s the backbone of its security? Cryptography is. Each participant on a blockchain network possesses their keys. This key is an equivalent of the digital signature. If a hacker alters a single transaction, all the peers present on the network will be immediately notified. The personal key corresponding to that transaction will become inactive. What it means is that to hack a blockchain network, the hacker has to alter more than 50 per cent of the network at the same time. Owing to its decentralized setup, blockchain data security and blockchain network security are often considered sophisticated and impermeable.
But, what does it mean for the security of cryptocurrencies and in terms of accepting crypto payments? Developed on blockchain security protocols, is the world of cryptocurrency and crypto payments that secure? If there are no significant cryptocurrency security issues, why do we need crypto security companies? What about cryptocurrency exchange security? We will discuss all these aspects of blockchain security, crypto security and crypto wallet security in this article.
Cryptocurrency Security Standards
Several informational systems use cryptocurrency. These systems include exchanges, marketplaces, games, cryptocurrency payment processors, crypto storage, etc. The use cases of cryptocurrencies will only rise in number with time. Cryptocurrencies play a crucial role when it comes to the security aspect of these organizations.
The cryptocurrency security standards help to audit the security aspects of these systems across 10 set parameters. These parameters include key generation, wallet creation, key storage, key usage, key compromise policy, keyholder grant/revoke policy, third-party security audits, data sanitization policy, proof of reserve and audit logs.
Following the security standards, each of these parameters gets a score on a scale of Level 1 to Level 3. Level 3 is the phase of the highest and the most comprehensive security. Such a robust security framework must’ve been the outcome of considerable blockchain issues. Let’s have a look at some of the areas and incidents of vulnerability when it comes to blockchain and cybersecurity.
Incidents of Cryptocurrency Hacking
There are several examples of security-breach in the world of cryptocurrency. Hackers and cyber attackers have stolen hundreds of millions worth of tokens. In early 2018, hackers stole 523 million NEM coins from the Japanese exchange Coincheck. The worth of these coins was $534 million. Nano tokens worth US$195 million were stolen from the Italian exchange Bitgrail. Security of bitcoins came under serious surveillance when it lost 11% of its value after the US$37.2 million CoinRail hacks.
Bitcoin Security Issues
The bitcoin security model is subject to several risks and threats. Researchers have found that bitcoin security risks often generate from bitcoin wallets. The lack of robust crypto wallet security makes even encrypted hardware wallets fall prey to malware. Bitcoin security risks also emanate from selfish mining. In selfish mining, some mining pools hide their blocks from the honest miners.
Several popular Bitcoin exchanges have also faced severe DDoS attacks. Then there are double-spending attacks and 51 per cent attacks. These attacks explore the serious loopholes that exist in the way how bitcoin security works.
Crypto Security Companies
Security in the blockchain is mostly about the security of the private key. With an aim to solve blockchain security vulnerabilities, many companies have come up with effective solutions. These companies provide highly efficient wallet software along with the hardware. They educate their clients and common users about the aspects of security. They also deploy SaaS solutions for large volume repositories to safeguard multiple cryptocurrencies.
Crypto Security Tokens
Is crypto a security? People often feel confused about this question. Here, we must clear common misconceptions. Crypto security tokens are instruments of value-transfer. They have nothing to do with the security of the cryptocurrency. To explain further, the value of a cryptocurrency is stored in it. The value is realised when the cryptocurrency is used to make a purchase. However, “Crypto” security tokens can be transferred as the value itself, like a piece of art.
How to Keep Crypto Holdings Secure?
One of the most convenient and hassle-free ways to keep crypto holdings safe is to use reputed and known wallets. Using a cold wallet is an intelligent choice in this regard. These wallets work in the offline mode. An offline device like USB is used to store information. These wallets ensure that the private keys of the users are never exposed to any type of online server.
Diversification always helps in reducing risk. Investors buy different stocks to maximize returns and reduce dependency on one specific stock. In the same way, it’s always safer to spread out the holdings. Keeping all your crypto holdings in one wallet is a risky proposition. The hacking of one wallet would result in losing all the holdings at one go. Therefore, to remain safe, spread out your holdings amongst different wallets.
The private keys are the most important when it comes to blockchain in security. One should not use keys that are common and easy to formulate. The private key should also be different from other passwords used to log in to other accounts. Moreover, it’s also better to use multi-signature or multi-key authentication.
It is efficient to take backups of cryptocurrency stash regularly. When taking backups it’s even more efficient to store them in hardware as well as in the cloud.
One should never work on shared environments or shared devices. When making a transaction one must be on an internet network that is not shared by someone else. Using wi-fi networks or hotspots make the transactions vulnerable. One should also use a sole-purpose device, such as a laptop or tablet, dedicated to making crypto transactions only.
Hackers and cyber attackers hunt for clues to break into your private key or password. They are majorly active on social media platforms and relevant crypto investment discussion forums. Therefore, one should never discuss his/her investment on the forum. Finally, to stay from attention, one should never indulge in large eyeball-grabbing investments.
The security of cryptocurrency and crypto payments is mostly about the security of the private key. One should always use multiple credible wallets to store and transact. One should also be mindful to create a robust, strong, and uncommon password. Staying away from the limelight also helps a lot to remain safe,
Hopefully, the vulnerabilities in the cryptosystem will reduce with each passing day as new security solutions and companies enter the market.
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