If you’re like many people, you may be curious about crypto. From crypto direct deposits and debit cards to decentralized saving and lending and cross-border payments, the cryptoeconomy is rapidly challenging many of the core ideas around what money is and how it can be put to work. As cryptocurrency grows in popularity and use cases, you may have questions about how this digital currency works—and how secure your personal information and finances will be. Read on for answers to some common questions about crypto safety and security.
How can I be sure that my crypto transactions will be secure?
When you make a cryptocurrency transaction, a record of that transaction is documented via a secure, decentralized database known as a blockchain. Blockchain technology essentially creates a transparent public ledger where all crypto transactions are permanently recorded and published, and can be examined and verified—but cannot be edited.
Although publicly recorded crypto transactions do include specifics, the coded information on the blockchain ledger does not include the name or personal information of the people involved; this helps keep your identity and privacy safe.
Essentially, the decentralized nature of the blockchain technology that cryptocurrency is built upon means that crypto is difficult to hack; transactions cannot be manipulated, and your personal information will stay private and safe.
Still, it is important that you take precautions as a crypto user to help keep your information and transactions secure. Using a trusted cryptocurrency exchange such as Coinbase to buy, sell, transfer and store your crypto is one important way to help protect and secure your assets.
Will my personal information be easy to find and steal?
One of the benefits of using cryptocurrency is that you don’t need to provide personal information such as your name or address every time you make a blockchain transaction. Instead, you use something called a “public key” that helps identify you, while still keeping your personal information pseudonymous. That means there is less risk of your identity or financial information being stolen or compromised.
Keep in mind that to buy and sell crypto on an exchange such as Coinbase, you do need to provide information including your name, birth date and address to help comply with legal mandates and to help protect you against fraud. This personal data, however, is not shared on the blockchain when you make a transaction.
It’s important to understand that the crypto exchanges used to access the blockchain have varying practices (and track records), when it comes to security. When selecting an exchange, choose one that uses best-in-class security practices, takes multiple steps to help ensure your account is safeguarded and offers educational resources to help you protect your assets.
Through our dedicated approach to security, Coinbase has never, to date, experienced a breach of our cryptocurrency storage systems. As the largest US-based cryptocurrency trading platform, Coinbase is currently trusted by approximately 98 million verified users, 13,000 institutions, and 230,000 ecosystem partners in over 100 countries. They trust Coinbase to easily and securely invest, spend, save, earn, and use crypto. The company is based on the radical idea that anyone, anywhere, should be able to easily and securely send and receive Bitcoin. It offers a trusted and easy-to-use platform for accessing the broader cryptoeconomy.
What steps should I take to protect my identity and digital assets?
Just as with any other digital account, it’s extremely important to take steps to protect and secure your personal information.
Do your due diligence on setting up a cryptocurrency wallet and take actionable steps to secure it. I recommend always using strong, random passwords that are unique to each of your accounts (tools such as LastPass or 1Password are great for creating and securely storing strong passwords for all of your digital accounts). It’s also important to use two-factor authentication wherever possible, ensuring that the email address you use for communications about your cryptocurrency account is secure. Also, stay alert and aware of any scam and phishing attempts.
Cryptocurrency is transforming the economy. To learn more about how Coinbase is advancing economic freedom around the world and how you, too, can safely manage your digital finances, visit Coinbase.com/learn.
• Mr. Muller is the Director of Security Operations at Coinbase. The security team at Coinbase is responsible for developing the physical and cyber technology, processes and team that safely stores one of the world’s largest holdings of cryptocurrency. Prior to Coinbase, Muller led the privacy and security team at GoodHire, a national employment background screening company.