By Adedapo Adesanya
The Chief Technology Officer (CTO) of top cryptocurrency company, Bitfinex, Mr Paolo Ardoino, has warned that as the adoption of the technology continues to grow rapidly, it is important for crypto newbies to take into account some risks prevalent within the ecosystem.
In 2021, global crypto ownership rates reached an average of 3.9 per cent, with over 300 million crypto users worldwide, according to data from TripleA, a global cryptocurrency payment gateway.
In a chat with Business Post, Mr Ardoino explained why it is critical to take security into account, saying, “Check if an exchange has had any previous incidents and how these incidents were resolved. Also, be sure to check what the recourse is for you if the funds in your wallet have been compromised.”
“It is also helpful to check the liquidity of the exchange and possible issues faced in the past or ongoing with regard to liquidity. Very closely aligned to this is to check if the platform has a verification or Know Your Customer (KYC) process – which serves to protect against fraudulent account creation by verifying those account holders are who they say they are,” he added.
Mr Ardoino also warned that cyber scammers are always looking for new ways to commit fraud.
“Scammers are increasing in their sophistication. One example is crypto-jacking – where hackers implant a piece of software that mines cryptocurrencies on a victim’s computer – further demonstrating that the ingenuity of cyber crooks should never be underestimated.
“Unsuspecting victims are left perplexed as their devices slow down to a snail’s pace, unaware of the criminal activity and where it emanates from. Whether you are a retail user or a business, you need to remain in a perpetual state of vigilance to guard against such threats,” he disclosed.
To prevent this, he advised newbies to “keep your account safe and look at combining password protection and basic anti-phishing controls, which may add resiliency to crypto-jacking attempts.”
“It may seem obvious, but users need to check the jurisdiction that the exchange operates in and whether they are able to make use of it last but not least, trading fees and spot prices are used during swaps/trades.
“These can sometimes be overlooked, however, certain exchanges claim to have zero fees, but when using their swap/trading functions, you realize that the spot price used in the trades is a few percentage points higher than other exchanges,” he added.
He also put forward how greenhorns in the ecosystem can securely use Bitcoin and cryptocurrency holdings.
“This should be done in cold storage using a ledger or similar hard wallet device. Do your research, and understand the basics and how exchanges and wallets work.
“Understand the larger environment and the impact it may have on the industry as a whole.
“Do your best to ensure that you know the risks associated with the market, including understanding what’s happening in traditional markets and securing your wallet. There is no such thing as too much security,” he quipped.
Dipo Olowookere