In the past, service providers have licenced consumer data to third parties with no consequence. Many times, data has been sold without the consent of the persons concerned. Facebook has been accused of selling its users' personal information in major news reports. It's also not just the active sale of data that's a concern. Thousands of confidential data files have been stolen from companies and organisations as a result of hacking.
Despite the fact that legislation such as the General Data Protection Regulation (GDPR) are starting to play a larger role in protecting people's privacy, there is still reason to be concerned. Owing to a lack of oversight, this is more prevalent in the cryptocommunity than in any other. Without a governing body to safeguard your anonymity, you're on your own to manage your crypto identity.
Companies and organisations all over the world infringe on people's personal information and identities on a regular basis. But, in the world of cryptocurrencies, how fragile is your identity?
Malicious data abuse is possible. It could be sold without your permission, stolen to commit fraud, or used to collect unauthorised information about you and your activities. In other cases, data that you knowingly provided could be leaked, hacked, or exposed to attacks. In this case, there is one major problem that contributes to bad identity management. That is the centralisation term.
Your information is managed by a single governing authority in centralised identity management systems. This custody isn't always secure, as some large corporations have shown. It can offer certain businesses and individuals an excessive amount of control over the data and how it is used. But identity management is about a lot more than just ethics.
The term "centralization" refers to the collection of all data in a single physical or digital location. Many infrastructures struggle to scale with the growth of data, resulting in vulnerabilities and single points of failure. Decentralised must play a central role in effective crypto identity management, as well as the protection of your funds.
A distributed ledger technology, or blockchain, is a form of distributed ledger. All transactions are publicly recorded, but no identifying information is used. When you buy Bitcoin, for example, the price you paid for the coin is displayed, but the buyer (i.e. you) and the coin are not made public. The central governing body is eliminated due to the public nature of a distributed ledger, making it impossible for someone other than you to own your data.
Decentralization through blockchain technology has a number of advantages. Blockchain introduces a new standard of encryption and authentication for crypto identity management. Data can be shielded from malicious behaviour, unauthorised changes, and even destruction thanks to distributed ledger technology's immutability. When it comes to cryptocurrency operation and transactions, the blockchain protects your privacy better than centralised entities including financial institutions.
However, be ready. There is no such thing as ideal technology in an unregulated market. It is your duty to manage your crypto identity, and you must be able to add more layers to your security strategy.
Just because you've used blockchain technology to liberate yourself from the constraints of authoritative control and knowledge sharing doesn't mean your identity is secure. Cyber criminals are a threat to the cryptocurrency industry. It's possible to leave a thread that hackers can follow if you make multiple transactions over a blockchain, for example. The frequency of your transactions could reveal your cryptocurrency wealth and expose you to greater risks.
A multi-use cryptocurrency wallet is an ideal way to help manage your crypto identity. Any time you make a transaction, this wallet creates a new public address for you. It is much more difficult for a hacker to track you down if you build a new public address each time. Different forms of cryptocurrency wallets each have their own set of benefits and drawbacks when it comes to assisting you with your identity management.
Another problem with identity management is when traders use social media to manipulate others and speak about their business. This makes their identity clear to hackers on the lookout. Hackers will be able to track transactions from that point forward if they give up anonymity. There isn't always a concrete way to secure your crypto identity after you've been revealed. To avoid ending up in a situation like this, it's best if you don't post about your trades on a regular basis, if at all.
Here's a list of things you can do to improve your identity security:
Use powerful, one-of-a-kind passwords. The best bet for a password is to use at least 15 letters, all of which should be random. The password should be gibberish in appearance. Since several hacking tools have dictionaries embedded in them that actively check for all password combinations, having a random, complicated password is critical. As a consequence, refrain from using words.
Avoid storing a large amount of cryptocurrency in your online wallet since it can be easily hacked. The bulk of your funds should be kept in cold storage.
When using your wallet or any cryptocurrency exchange, use two-factor authentication (2FA). This is standard procedure in many countries. It simply adds another layer of security.
Don't conduct cryptocurrency transfers over public Wi-Fi. On public Wi-Fi, hackers can easily intercept data packets and extract information.