Answers to the Top Three Cryptocurrency Security Questions

If you’re like a lot of people, you might be curious about crypto. From crypto direct deposits and debit cards to decentralized savings and lending and cross-border payments, the cryptoeconomics is rapidly challenging many fundamental ideas about what money is and how it can be used. As cryptocurrency grows in popularity and usage, you may have questions about how this digital currency works and how secure your personal information and finances are. Read on for answers to some common crypto security and security questions.

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 through a secure, decentralized database known as the blockchain. Blockchain technology essentially creates a transparent public ledger where all crypto transactions are permanently recorded and published, and can be reviewed and verified, but cannot be changed.

Although publicly recorded cryptographic transactions include details, the information encoded on the blockchain ledger does not include the name or personal information of those involved; this helps protect your identity and privacy.

Essentially, the decentralized nature of the blockchain technology on which cryptocurrency is based means that crypto is difficult to hack; transactions cannot be manipulated and your personal information will remain private and secure.

Nevertheless, it is important that you take precautions as a crypto user to keep your information and transactions secure. Use a trusted cryptocurrency exchange such as Coinbase buying, selling, transferring and storing your crypto is an important way to 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 each time you complete a blockchain transaction. Instead, you use something called a “public key” that helps identify you, while keeping your personal information under a pseudonym. This means there is less risk of your identity or financial information being stolen or compromised.

Keep in mind that to buy and sell cryptos on an exchange such as Coinbase, you must provide information such as your name, date of birth and address to comply with legal obligations and protect against fraud. However, this personal data is not shared on the blockchain when you make a transaction.

It is important to understand that the crypto exchanges used to access the blockchain have varying security practices (and track records). When selecting an exchange, choose one that uses security best practices, takes several steps to ensure your account is protected, and offers educational resources to help protect your assets.

Thanks to 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 invest, spend, save, earn and use crypto easily and securely. The company is based on the radical idea that anyone, anywhere should be able to send and receive Bitcoin easily and securely. It offers a reliable and easy-to-use platform for accessing the wider cryptoeconomy.

What steps should I take to protect my identity and digital assets?

As with any other digital account, it is extremely important to take steps to protect and secure your personal information.

Do your due diligence when setting up a cryptocurrency wallet and take concrete steps to secure it. I recommend always using strong, random passwords unique to each of your accounts (tools like LastPass or 1Password are great for creating and securely storing strong passwords for all of your digital accounts). It is also important to use two-factor authentication whenever possible, ensuring that the email address you use for communications regarding your cryptocurrency account is secure. Also, stay alert and aware of any scams 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 securely manage your digital finances, visit Coinbase.com/learn.

Mr. Muller is Director of Security Operations at Coinbase. The security team of Coinbase is responsible for developing the physical and cyber technology, processes and team that securely stores one of the largest cryptocurrency holdings in the world. Prior to CoinbaseMuller led the privacy and security team at GoodHire, a national employment background check company.