Three steps on how to manage the risks that come with buying Bitcoin

Like any investment or new technology, there are always risks. Here’s how to protect yourself as much as possible

15 July 2019 - 08:00
If you buy Bitcoin, it’s also your responsibility to take precautions in keeping your account safe.
Image: Supplied/Luno/Unsplash If you buy Bitcoin, it’s also your responsibility to take precautions in keeping your account safe.

Every now and then we hear a newsworthy story of a victim losing a considerable sum of Bitcoin. The majority of these cases are the result of an indirect hack, a phishing incident or a scam.

In hindsight, all of these incidents are easily avoidable with the right security measures in place.

As with any new technology, it’s taken time for both customers and companies to determine the best options for security, and to learn from their mistakes. So how can you manage the risks that come with buying Bitcoin?

Let’s have a look. 

Step one: choose a reputable and trusted company

The first step to protecting your Bitcoin is ensuring you choose a reputable company to buy, sell, spend, store and manage it all.

Before handing over your money or details, it's always a good idea to run through a checklist like this:

  • Look for a company with a proven track record
  • Check out their social channels and resources 
  • Make sure your questions are answered clearly when/if you reach out to them
  • Consider the company’s procedures for verifying customers and preventing crime
  • Research venture capital firms invested in the company

Make sure you're comfortable with the preventative measures in place to protect your money (and your data).

Step two: protect yourself from hackers

Great security doesn't stop with finding a reputable company. If you don’t do your part to protect your account, no amount of backend security will prevent hackers from stealing your Bitcoin.

It’s a bit like keeping your home safe. Even a state of the art door lock won’t keep you safe if you leave the door wide open. Remember, hackers tend to exploit the weakest link in any security system.

Here are a couple of suggestions when it comes to maintaining your own security:

  • Choosing a strong password: use an unusual, unique password with at least 16 alphanumeric characters, and never share it with anyone;
  • Turn on two-factor authentication: this means no one can access your account without access to your phone;
  • Protect your email account: use a secure, unique and complex password and turn on two-factor authentication; and
  • Lock your account: if you suspect your account is compromised, lock it.

Step three: learn to spot scams and phishing

Phishing attacks happen when criminals create a website or email that looks like it belongs to or comes from a trusted company. Using this imitation, they’re able to deceive you into giving them important details, including your login or payment information.

You might receive an email from what appears to be your Bitcoin Wallet provider asking you to check some recent activity. When you click the link in the email, it might ask you to re-enter your payment details. If you do this, hackers will most likely gain access to your information.

This isn't limited to Bitcoin or cryptocurrencies - phishing activity has been a growing concern across industries with an online presence. 

They look real at first glance and ask customers to sign-in to their accounts. If someone does this, criminals can then log into their account and steal from it.

While it's not the fault of the company the phishers are pretending to be, phishing can still harm the reputation of a legitimate company because people may not understand that the attack came from elsewhere. The only step trustworthy companies can take is to try to educate everyone about phishing, but it’s up to you to take extra care of your access details.

To avoid becoming a victim to a phishing attack:

  • Always check the URL of a website before signing in or clicking on an ad;
  • Enter the URL directly rather than googling the company name;
  • Never share your password or payment details by email or message;
  • Pay attention to your intuition — if something feels wrong, double check it;
  • Don’t offer your details without reason and be careful with sensitive information (e.g. your PIN or password);
  • Check the address before replying to emails; and
  • If you’re unsure about a website, try signing in with a fake password and see where it takes you

To learn more about the risks that come with Bitcoin visit the Luno Learning Portal.  

Luno is a cryptocurrency wallet and exchange provider, that makes protecting customers' money and data the top priority. With some of the world's most sophisticated Bitcoin security systems and a strong, proven track record they’ve never been compromised. Check out the Luno App and upgrade your money today.

Ready to step into the future? Sign up here to get R100 worth of free Bitcoin.

For more information, visit the Luno website or follow on Facebook, Twitter, Instagram, YouTube and LinkedIn.

This article was paid for by Luno.