What is Cryptocurrency?
Cryptocurrency is a digital form of monetary exchange that uses cryptography, a secret code, to secure financial transactions and verify the transfer of assets. Unlike regular currency that is controlled under central banking systems, cryptocurrencies use decentralized control through distributed ledger technology such as a blockchain, a digital hash of time stamps and transactional data.
Are There Different Types of Cryptocurrency?
There’s thousands of variations of cryptocurrency. In 2009, Bitcoin was the first open-source software to create decentralized cryptocurrency. Since then, there has been a boom of cryptocurrencies that include Litecoin, Ethereum and Ripple.
How Can I Protect my Cryptocurrency?
There’s a number of ways an individual can protect their cryptocurrency, however, that doesn’t necessarily mean it will always be safe. The arising issue with digital exchange is the fact that it can be a popular target for hackers. It has been estimated that millions of crypto coins have been lost forever due to hacking and lost passcodes. Private keys and codes cannot be reset when forgotten, making the preservation of the passcode crucial.
Digital wallets are commonly used to store crypto funds, the wallet signifies that the person owns the currency which is stored through the blockchain connected to the wallet. A cryptocurrency wallet, or a “hot” wallet, is a type of software that is connected through the internet and has two components, the public address and the private key. The public address is what’s used to receive cryptocurrency and the private key is used for spending. Since these software applications are connected to the internet, they become more susceptible to hackers. However, crypto investors usually go the extra mile and create an offline wallet, also known as a “cold” wallet, which is essentially a safer housing device for private keys in an offline environment. To go even further, a physical device that is not connected to your smartphone, such as a USB Drive, can be used to hold passcodes and anything of value.
Can I Take Legal Action When My Digital Wallet Is Hacked?
Cryptocurrency is a great medium for investors but also a risk at the same time. Unfortunately, because cryptocurrency is unregulated by any government entity or centralized bank, there is no legal recourse for hacked or stolen digital accounts. That is why taking steps to protect your wallet is pivotal.