How Does Cryptocurrency Affect Cyber Security?

Posted By: Team Moody,

Bitcoin and other types of cryptocurrency have increased in popularity over the past several years. They offer many advantages over traditional currency and are expected to become a major part of global finance in the future.

But like any new technology, the advent and subsequent popularity of cryptocurrency entails certain risks. Many of these are unique and unfamiliar, and current security measures are unfortunately ill-equipped to handle them.

One of the most alarming threats is the increasing risk of cybercrime, which warrants a totally new approach to how criminal activity is dealt with. Getting cyber liability insurance is only one solution, but there is also a need to adopt more proactive ways to handle potential security breaches and attacks.

What is cryptocurrency?

Cryptocurrency is essentially money or digital assets in electronic form. Like traditional currency, it is also used for financial transactions such as selling and purchasing goods and services.

Some of the main characteristics of cryptocurrency are:

  • They allow individuals and organizations to engage in transactions without going through traditional intermediaries such as banks or governments
  • The assets are decentralized and aren’t associated with any bank
  • They are volatile and can increase and decrease in value within a short period

Why is cryptocurrency such a high cybersecurity risk?

Why is cryptocurrency so attractive to cybercriminals? In most cases, it is for the same reason that it is so appealing in the first place: decentralization. Because cryptocurrency isn’t associated with any bank or traditional financial system, it is virtually anonymous and almost impossible to trace. For cybercriminals, cryptocurrency offers many opportunities to steal assets and funds.

Cryptocurrency is the most common form of payment demanded by ransomware attackers. It is ideally suited for this purpose, allowing cybercriminals to conceal their identities when demanding ransom. And when you do pay them, they can convert the finds into traditional currency with little risk of detection.

Furthermore, all traces of the transaction are virtually untraceable. Because there is no evidence to link the perpetrators to the incidents, crimes often remain unsolved. And since cryptocurrencies are now commonly used in many markets, the possibility of being victimized is increasing daily.

Cryptocurrency concerns for individuals and businesses

There are many ways by which you could be victimized by cybercriminals, whether you deal in cryptocurrency or simply own some. And if you use cryptocurrency in your business, the risk of falling prey to unscrupulous parties increases exponentially.

Some of the cybercrimes you should be on guard against are:

Phishing. This often involves mounting attacks on individuals or employees. The main objective is usually to steal personal data and information so that these can be held for ransom.

Hacking trading platforms. This involves an attack on a trading platform, often targeting those with security holes. When these platforms’ defenses are breached, cybercriminals may steal funds from users.

Stolen registration forms. These are the most common ways by which cybercriminals steal personal information. The data they retrieve is usually sold on the black market.

Compromised apps. These attacks usually involve the use of third-party applications. Again, these can be used to steal personal data and information, although they can be used for future attacks as well.

Malware. Cybercriminals may infect crypto mining rigs with malware and steal resources. In some cases, malware is also used to steal funds from online wallets.

When dealing with cryptocurrency, you should always remember that it is a fully decentralized system. Therefore, no central governing body or agency monitors individual transactions and the overall cryptosystem. For better or worse, there is also virtually no regulation, which further increases the risk of cybercrimes. While the advent of cryptocurrency undoubtedly offers many benefits, it is also vital to be aware of the dangers.

Protecting yourself from cryptocurrency-related crimes

As alarming as the threat of cryptocurrency-related crimes are, there are ways by which you could avoid being victimized. The most obvious solution is to implement crypto cybersecurity measures with up-to-date protocols and practices. It is also a good idea to exercise caution when using critical websites and applications.

Even just having a high level of security in place is enough to deter most attacks. Cybercriminals are always looking for easy prey, and most will give up if they detect a solid cybersecurity system in place.

Even so, you shouldn’t let your guard down and take extra precautions as much as possible. It is also advisable to get insurance coverage against crimes related to the use of cryptocurrency so you can reduce the damage that criminal attacks might cause.

About Moody Insurance Worldwide

Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn mor