If you asked the average person, who was unfamiliar or somewhat familiar with cryptocurrency, if they would accept a free gift of crypto coins, what do you think their reaction would be?
Their first question might be, “Is that safe?” or maybe, “Is that legal?”
And it would be completely safe, assuming, of course, you can trust the person giving you the gift. Trading cryptocurrency is one of the most secure ways to make financial transactions.
But you may wonder, what about crypto credit cards? Does introducing a payment processor increase the risk of fraud, hacking, or any other digital exploits? Let’s discuss some key issues.
Is Crypto Safe In General?
First, understand that crypto is safe, legal, and rising in mainstream popularity. About 16% of Americans have invested in or traded crypto, as well as a greater number of millennials.
The “decentralized” factor of crypto makes some people nervous, as does its association with anonymous payments. Sure, bitcoin payments have been made on the dark web. And people have tried to hoard bitcoins and keep them a secret from the IRS.
But as always, it’s about the individual you’re dealing with, and not the technology itself. Crypto-to-crypto transactions are very secure and comparable to trading in cash.
Learn more about how blockchain works on our ultimate beginner’s guide page.
Payment Processors and Enhanced Security
The lack of a financial intermediary is what draws some people to online trading.
But recently major credit card companies have been getting in on the action and some payment processors now even offer crypto credit cards and debit cards.
A few years ago, there was no intermediary party. Crypto to dollar conversions and deposits might have been made, but there was a significant waiting period.
However, the popularity of crypto and NFTs as both a legitimate currency and an investment opportunity has endeared it to major financial institutions. Even major payment network processors like Mastercard are now working with cryptocurrency.
So while working with a payment processor may not be as safe as working exclusively on the blockchain, you as the consumer actually get more protection when credit card companies are involved. Every reputable credit card provider offers protection against fraud.
A credit card from SoFi can even offer new members a crypto rewards program.
Digital Exploits of the Modern Era
As crypto rises, there are more security risks than ever before. One of the biggest and most complicated crypto heists happened after an Axie Infinity game experienced an “immense user load” and had to take a shortcut – one that ended up losing $625 million.
But far more common are schemes like “Squid Game”, which Time Magazine reported, saw crypto investors compete for a new cryptocurrency in an immersive online game, and then lose everything when the developers disappeared.
As you can see, some degree of common sense – and avoiding suspicious characters (and well, suspicious video game characters apparently) – might protect you from some of the threats going on right now.
For more on cryptocurrency fraud, read our article on the largest crypto heist in history.
What Can I Do to Protect My Assets?
The good news is that on the blockchain itself, fraud is rare. Whenever a transaction takes place a new block is made and a series of blocks become part of a chain. If a person tries to tamper with a block, the chain becomes invalid and sometimes it’s easy to find the corrupted block.
The biggest risk would be for someone hacking into the blockchain and controlling the approvals of transactions. The best way to defend against the rare case of blockchain hack would be to secure your cryptocurrency account and protect your crypto wallet password information.
The crypto wallet software provider actually provides some degree of extra protection beyond what decentralized third parties buyers and sellers can do. Wallets store public and private keys. Public keys are shareable but private keys are not.
Never share private key information or forget your password and reduce the risk of online vulnerabilities. An antivirus program can also help, not to mention avoiding any suspicious websites that autoload scripts or ask for unusual permissions.
Crypto Credit Cards – The Safest Way to Do Business
Crypto has earned a reputation as being sketchy, but not because of any mass-scale vulnerabilities. Most of the time, people are afraid of crypto because they don’t understand how it works, or they think it’s going to lose all value.
But as far as security goes, with the double whammy of payment processing protection plus blockchain technology, using a crypto wallet is the safest way to exchange payments online.