Cryptocurrencies are revolutionizing the world as we know it. Not only do they provide a new way of conducting transactions, but they also have the potential to completely transform the digital landscape. Cryptocurrencies are built on blockchain technology, which is a distributed ledger system that allows for secure and transparent recording of transactions. This makes it difficult for criminals to commit fraud or identity theft, as their activities would be easily traced and tracked. As more businesses and individuals adopt cryptocurrency, the risk of online fraud and identity theft will continue to decrease. Let’s take a look into how using crypto can actually make transactions safer.
Of all the industries in the world, cryptocurrency may be one of the most susceptible to hacking. This is because it is still young and growing, making it an easy target for criminals. Hackers know that they can get away with a lot of money, as the industry is not well regulated. Many people have lost money in this way, and it seems like there is no end in sight.
The cryptocurrency space is growing and changing rapidly, and so are the methods thieves and hackers use to steal tokens and coins. However, with a bit of vigilance and preparation, you can protect your digital holdings.
There are physical, or “cold”, wallets that look like USB drives and serve as a physical store for coins and tokens. Each hardware wallet is linked with a private key: a password-like bit of code that allows you to decrypt the wallet and access the coins or tokens that it stores. While hardware wallets are tremendously effective against digital thieves, there is also a risk: Lose your password key, and you’ll never recover the contents of the wallet.
Despite the prevalence of multi-factor authentication (MFA), data breaches and security incidents still occur. Coinbase suffered a significant breach last year when hackers exploited a flaw in its MFA system to steal cryptocurrency from customer accounts via phone numbers. The scammers managed to infiltrate more than 6,000 accounts in this manner and stole an unknown quantity of currency and data, according to reports.
MFA systems, which use tokens or PINs among similar methods to confirm users’ identities online, are being torn down by hackers. Sensing this weakness in the system, many exchanges and merchants have turned instead to biometrics as a more secure alternative. One option they are deploying is selfie biometrics; for instance, if you want to purchase something online with an app like Everest Foundation’s DAO (Decentralized Autonomous Organization), all you need is a 2-megapixel autofocusing camera such as those on most smartphones that will record your face when making purchases and compare it against images already on file, making it harder for thieves to steal your identity.
To store identity on a blockchain would require converting identity documents like identification and storing them as tokens on a distributed ledger run by the US government. If an authentication system like this were implemented at the federal level, agencies could verify anyone’s digital credentials with just one check to make sure they’re who they say they are before granting access to public benefits or financial services.
To verify requests, an institution would be provided with a digital identity by the user and request verification from their digital identity on the chain. This would route through the federal network and appear within your federal web application for logging in to a different kind of identification (like an ID card or driver’s license). The customer recognizes the request to verify their new-found identity that regulators can confirm is accurate based on what it says about them digitally. Best of all, this authentication process does not require information such as date of birth, Social Security Number, address, or photo ID like other systems do which reduces the risk for both customers and institutions because risks are reduced here too. Furthermore, potential fraud could also be future-proofed when facial recognition software is used alongside more unique biometric markers like retinal scans or fingerprint technology.
When using identity verification processes with crypto, they have security issues that could be alleviated by implementing blockchain technology. It would offer incomparable security and transparency to reduce the theft of identity documents and provide information about the perpetrators to identify fraudsters. Colorado, for example, is already integrating digital identities into their state-issued identification cards that agents of the state are allowed to accept as a valid form of ID in place of physical copies. This process should be taken national so it encompasses federal forms like passports or driver’s licenses with those issued by individual states. This will increase security while reducing identity theft and fraud and making accessing your personal data easier through password-protected wallets stored on cell phones if they can integrate features such as facial recognition or biometric scanners via AI integration.