Cryptocurrency: The Cybersecurity Risks Involved

Cryptocurrency presents a new medium for financial technology and investments. We look at the cybersecurity risks that come with it.

Due to the advent and increasing popularity of cryptocurrencies such as Bitcoin and Etherium among others, there has been an increased utility and awareness about the possible applications and integrations for it. This class of asset uses encryption and open-distributed ledger technology to facilitate its transactions between accounts, which is similar to almost every cryptocurrency built on blockchain protocols.

 

Despite these security measures, there are still cybersecurity risks that present themselves with this financial technology. A few of the significant ones are noted as follows.

 

Account Security of Cryptocurrency

Thanks to the nature of Blockchain technology, cryptocurrency can only be accessed via a confidential and private digital key comprising of complex password codes, which enable the owner of the cryptocurrency account to access it. A common issue with this is that most blockchain users store their private access keys in their personal computer. This identity and access management risk attracts cyber threat actors as personal computers are one of the most vulnerable attack points for the illicit extraction of confidential data. In addition, once a private access key has been stolen, there are no methods to get it back or to secure it again.

 

It is advised by experts that organizations looking to make investments into cryptocurrency should be aware of the dangers that an account breach can bring to their entire investment. Having ownership and being solely responsible for the security of your cryptocurrency account means that a successful hacking attempt can lead to permanent loss with no means of restitution.

 

Vulnerable & Unregulated Crypto Transactions

Cryptocurrency is decentralized, meaning that there is no overseeing authority or administrator that monitors or regulates the creation, propagation, and management of the currency. Therefore, the transactions involved during crypto exchanges are not regulated consistently, and in some cases, not at all, depending on the location of the transaction. Unlike traditional banks and their transactions, crypto transactions have no governmental superintendence or auditability.

 

This security risk has been documented with many cybersecurity breaches in recent years, affecting many major transactions, one of the most notable being Coincheck.

 

Volatility of Cryptocurrency

The nature of cryptocurrency in general is that there are many unknown external factors that make them a volatile investment for companies. Digital currency is essentially a non-entity, and the unknown factors contribute to the inability of even the most competent investors to do proper research and due diligence. As a result, there is much confusion on how cryptocurrency functions which lead to a myriad of cybersecurity lapses.

 

The lack of extensive knowledge of cryptocurrency and crypto exchanges can make people more susceptible to cyber-attacks, one of which is phishing where they are prompted to share account details or deceived into facilitating a fraudulent exchange. Additionally, potential investors may unknowingly bypass the diligence that is needed in traditional financial investment when it comes to cryptocurrency and digital assets.

 

 

Find out more about potential cybersecurity risks within your organization. Reach out to our security consultants via +65 6536 0668 or info@adnovum.sg.