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Staying Safe In Crypto: Keeping Your Digital Assets Secure And Protected
India has experienced something of a crypto boom, with a surge of interest and investments from major global players, paving the way for the nation’s burgeoning crypto landscape.
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Back in April 2018, the Reserve Bank of India (RBI) had imposed a banking ban that barred banks and other financial institutions from facilitating any services in relation to cryptocurrencies. Recognising the impacts that stifling crypto innovation could have on the nation’s economy, India’s crypto industry banded together to fight the case, which culminated in a series of hearings in the Supreme Court. Needless to say, it was a momentous day when the Supreme Court quashed the RBI’s banking ban in early March this year, legalising cryptocurrency trading and allowing the public to freely buy and sell digital assets on exchanges linked to banks.
Since then, India has experienced something of a crypto boom, with a surge of interest and investments from major global players, paving the way for the nation’s burgeoning crypto landscape. However, while RBI’s banking ban has already been lifted, there still remains some lingering uncertainty and concerns surrounding the safety of cryptocurrencies in India, due in part to the lack of guidance from the central bank. With unclear regulations and unanswered questions, Indians who are looking to dip their toes into cryptocurrency trading are left wondering about its legal status or whether it is safe for them to do so.
Security in the Crypto Industry
Cryptocurrencies have come a long way since the first emergence of bitcoin. From the meteoric rise of its value to institutional ventures such as central bank digital currencies (CBDCs) and Facebook’s plans to launch Libra, its own cryptocurrency—the asset class has grown more prominent over the years, which makes it all the more important for it to be as safe as it can be.
Security in the crypto industry has also come a long way. For instance, organisations have made use of heavy encryption, whitelisting of addresses, tightening of operating procedures and numerous other methods to improve their security. The technological solutions offered by wallet providers are also increasingly robust. However, it is important to remember that as the technology grows more and more sophisticated, so do the hackers. As such, it is vital that the security protocols and infrastructure in the crypto ecosystem remain up-to-date in order for the industry to progress.
Establishing clear regulations and institutional standards for security could also be a way to help the market become healthier and more transparent and ensure that customers are protected—doing so will build trust and strengthen the overall reputation of the digital assets market. The crypto industry will not thrive without proper security practices and safeguards being put in place to protect the assets and interests of customers.
Crypto Trading Safety 101
While there is still plenty of work to be done in the realm of crypto security, here are some helpful considerations to keep in mind as a user in order to ensure that your funds remain safe and protected. If you are new to the crypto market, it would be a good idea to conduct ample research beforehand and opt to use exchanges that go above and beyond to prioritise security as well as the interests of their users. Choosing a reputable and highly secure exchange significantly reduces your chances of falling victim to a hack. The best and most reliable platforms are open about the level of security they provide and give you a plethora of tools to secure your account.
You should also choose exchanges that are in compliance with KYC regulations and enforce robust identity verifications for all its users—these processes are necessary to protect the organisation from fraud and losses resulting from illegal funds and transactions. The good news is that KYC verifications do not have to be cumbersome or time-consuming. In fact, some exchanges even offer simplified, tech-enforced KYC experiences that allow users to be onboarded in under 5 minutes, without compromising security. In addition, having your accounts protected by two-factor authentication (2FA) is critical. 2FA provides an additional level of security for the authentication procedure, making it more difficult for an intruder to penetrate your wallet or exchange account because knowledge of the password alone will not be enough to permit access. Choose exchanges that offer multiple 2FA methods, including software, SMS, and hardware devices.
Another thing you can consider is using a cryptocurrency wallet to manage your crypto assets and keep them secure. Essentially, exchanges are vulnerable to hacks and cyber attacks because the target is centralised. To alleviate that risk and protect your own digital assets, you can opt to withdraw your funds from the exchange and use a private wallet to store your cryptocurrency. Like exchanges, there are many cryptocurrency wallet options out there, but the essential distinction between them is whether they are hot or cold. While hot wallets—which are connected to the internet—give you great accessibility, it is much safer to store the majority of your crypto in a cold wallet which allows you to store your funds offline; being cut off from the internet, cold wallets automatically keep your funds safe from hackers and viruses.
As cryptocurrencies remain mostly unregulated, a majority of exchanges do not have an obligation to follow securities investor protection procedures. Even so, exchanges that prioritise the security of their users’ assets will take extra precautions to insure their funds from theft—opting to use such exchanges can provide you with greater peace of mind knowing that in the event of a security breach, your losses will be covered. Finally, in order to navigate the cryptocurrency market in a safe and informed manner, it is important to arm yourself with the right knowledge, just as you would when learning any new technology.
Through partnerships with industry leaders such as BitGo and Onfido, CoinDCX plays an active role in helping the Indian crypto industry to flourish, so that millions of Indians can benefit from this new asset class while remaining safe and protected.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.