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Cryptocurrencies forever changed the idea of personal finance and doing business. Over the years, they cause controversy, are criticized, give rise to crime, are accompanied by failure, and make it possible to earn good money.Despite its many advantages, digital money has many disadvantages. Naturally, they are common to all financial markets, but in the case of cryptocurrencies, risks double due to their specific features. What threatens those who choose trading bitcoin or other crypto coins as a tool for investment?
The first of them was created back in the days of the emergence of electronic payment systems (WebMoney, QIWI, etc.). Now their counterparts are adapted to the cryptocurrency market and can be activated wherever such an opportunity arises. The most common methods for stealing crypto coins are:
Owners of digital money should be extremely vigilant and try to be one step ahead of malware – use reliable anti-virus protection, check all addresses, and not follow suspicious links.
Cyberattacks are the second-largest problem and a frequent occurrence in the world of developing cryptocurrencies. Cases of hacker attacks are becoming more common, and fraud methods are becoming more sophisticated. Bitcoin wallets and the massive amounts that are traded on trading floors have become especially attractive to thieves. Cryptocurrency exchanges were repeatedly hacked as a result of which many were closed due to bankruptcy.According to experts, the security problem in the world of cryptocurrencies will “hang over the heads” of investors for a long time to come.“I’m skeptical of any idea that supposedly can solve the security problem. In my opinion, no technology or mechanism can protect the cryptocurrency from hacker attacks and frauds,” said Tyler Moore, associate professor of cybersecurity at Tulsa University, who plans to publish A new study of the vulnerability of cryptocurrency exchanges soon.
The situation is exacerbated by the lack of an investor insurance system. They cannot claim damages, although part of the exchanges is positioned and acts as virtual banks.Bitcoin is intangible digital codes for which there are no property rights. If they are stolen from a virtual wallet, the owner can neither identify the thief (due to anonymity and decentralization) nor confirm his right to coins (due to the lack of a law on personal property). A similar situation occurs when transactions are carried out in the name of an illegal party. However, investors have no other choice but to conduct business with exchanges that do not have equity for insurance of losses, as with ordinary banks, whose activities are regulated by law.”When a bank account of a client of a bank is hacked, there is always a third party ready to intervene to cope with the problem. But this does not apply to cryptocurrency exchanges. Most likely, due to the” virtual “features of digital coins, they will never be completely safe,” – says Darin Steinfield, CEO of KeepKey. No one offers cryptocurrency insurance, although many projects are under development.
This is the main reason for the collapse and the urgent problem for most cryptocurrency exchanges. Many cannot provide enough money to “stay afloat” for a long time. According to Eric Voorhees, founder of ShapeShift:”Every day, the currency exchange should be carried out for $ 100 thousand to $ 1 million. For trading operations, certain commissions must be withdrawn so that equity is at least $ 25 million.”And this is only a small part of what is required for the full functioning of the service.
Technical malfunctions in the sites where Bitcoin wallets are stored is a reasonably common occurrence. Investors who have suffered losses cannot claim a refund regardless of whether the problem is caused by malicious actions by hackers or by the operator’s negligence in developing software.
When conducting operations through the exchange, the user does not own the funds that are stored on his account – the assets are owned and controlled by the exchange. The site only provides access to them at the entrance to the system. Thus, the owner fully trusts his Bitcoin wallet to a third party, relying on the security measures that she takes to protect money.