Why is security important when investing in Cryptocurrency?

Content Producer · 1 October 2020
As with any digital asset, Cryptocurrency can become the target for online fraud or scams. In this article, we discuss how to keep your crypto safe and the platforms that enable you to do so.

It’s no secret security is important when it comes to investing with exchanges, and the same is especially true when investing in the cryptocurrency exchange.

As Bitcoin is a decentralised asset, some investors believe it’s a safe asset. However, the decentralised nature also means that there is no central authority that oversees the asset and so the investor needs to take full responsibility to securely protect their wallets.

What is a crypto wallet and why do you need one?

Similar to if you were storing cash, a crypto wallet is a place to store, send and receive cryptocurrencies which is generally more secure as it often uses two-factor authentication. This is essential should you want to receive, store or send any bitcoin. Instead of storing the actual bitcoin, the wallet stores a private key which is a secure digital code that is only known to the owner of the wallet.

There are steps you can take to ensure you keep your wallet and the cryptocurrency you hold as protected as possible.

Treat your crypto wallet like a real wallet

Would you feel safe carrying thousands of dollars in your wallet when you go out? If you wouldn’t do this with your physical wallet, consider the safe for your crypto wallet. Generally speaking, it is best practice to keep minimal amounts of bitcoin in your wallet (on your mobile, server, or computer) that you intend to use and keep the remaining funds in a more secure space.

Use best practices for online security

A good way to think about your private key is treating it like your other important passwords and treat it the same way. Keep the key offline, use a strong password, and never give your password away. Try to always use a secure internet connection to minimise the risk of the network, use current antivirus software and be careful with your online activity. Aim not to click on any links from suspicious or unknown sources to avoid scams.

Be vigilant with online exchanges and wallets

One way to assess the protection and security of your wallet is to research the certifications of the provider you are using to actively trade crypto. Certifications such as the Blockchain Australia Certification that confirms accordance to the  Australian Digital Currency Industry Code of Conduct are valuable to investors.

The Australian Digital Currency Industry Code of Conduct sets out a number of different requirements in different business areas to ensure the best practice standards of the operation of Digital Currency Businesses in Australia. These areas include; legal & compliance procedures, customer protection, transparent pricing, dispute resolution processes, as well as data security. Achieving this certification requires meeting and exceeding these standards via an independent audit process that is ongoing, requiring future audits in order to retain the certification.

Businesses who are certified under the Code of Conduct offer peace of mind to consumers as they have passed an independent external audit process and successfully demonstrated compliance with these standards. Currently, CoinSpot is the only exchange that has both Blockchain Australia Certification and internationally recognised ISO 27001 certification for information security.

Stay informed of the evolving crypto market

Russell Wilson, CEO of CoinSpot emphasises the need to stay on top of the information released by crypto providers.

“We believe that as a community we are still relatively early in realising the benefits that blockchain technology is bringing into our lives and our communities. With so many new and exciting businesses entering the space it is important to provide consumers with independent and verifiable information, resources, and service providers to enable them to make informed decisions.”

As the bottom line, you as the investor are solely responsible for the protection and safekeeping of your crypto portfolio. The market is constantly changing and evolving, which is why it is so important to be aware of the latest news and developments of the platform you use to invest and the wider crypto scene.

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