If you trade in cryptocurrencies such as Bitcoin, you’re putting your investments on the line. Unlike traditional banking practices, you have virtually no safeguards to protect your assets. Meaning, you can lose everything to hackers or human error at any time, with no recourse at all.
If you want to protect your Bitcoin, it pays to have a virtual private network (VPN), which forms a privacy shield over your Internet connection.
So how do you protect your Bitcoin with a VPN? What are the privacy benefits of this software? In this article, we’ll give you the answers.
Introducing Cryptocurrencies
If you’re new to cryptocurrencies, then in simple terms, it’s virtual money. While they technically operate like fiat currencies (dollars, yen, euros), you cannot use them in the physical sense. There are no Bitcoin or Ethereum banknotes to withdraw and spend.
You can buy and sell Bitcoin on virtual exchanges and store them in online or standalone hardware wallets.
Speculating on Bitcoin Prices
Predicting Bitcoin’s (BTC) price is a hazardous affair with millions of traders looking to profit by speculating on its rise or fall.
According to Nigel Green, the deVere Group CEO and founder, Bitcoin’s prices may well “surge before the end of 2020”.
“Like gold, Bitcoin can be expected to retain its value or even grow in value when other assets fall. There’s a growing sense that we’re going to experience a mini-boom similar to the end of 2017,” says Nigel Green.
Protecting Your Crypto Investments
Since Bitcoin and other cryptocurrencies are not controlled or regulated by a monetary authority, you’ll need to protect your devices independently. If not, your investments are vulnerable to hackers and malware attacks. Recently a DForce hacker stole $25m in cryptocurrencies by breaking into their Chinese-based system.
You can read a tech explanation of that hack here.
Not Your Keys, Not Your Coins
Time after time, individuals and exchanges have lost funds due to hacking activity. With these threats ongoing, you can improve your online privacy with a VPN, which hides your IP address and conceals your device’s location.
Remember, if hackers access your Bitcoin wallet, there’s currently no regulatory body that’ll intervene on your behalf. So if someone manages to steal your Bitcoin, it’s no longer yours.
It’s just gone.
What is Bitcoin Trading?
Cryptocurrencies such as Bitcoin and Ethereum are decentralized assets and are not regulated by a central authority, say a bank or government.
When a trade occurs, it’s verified on a blockchain network, a digital ledger technology (DLT) that stores your data on thousands of individual servers.
The blockchain makes it harder for hackers to game the ledger as all transactions are transparent.
Protecting Your Bitcoin Wallet
Many traders keep their assets in online wallets and access them with a private key. If you ever forget this key, there’s currently no way you can retrieve it, so your Internet security is paramount.
In simple terms, a private key is your crypto password – a means of identifying you as the real owner. When the crypto space says “not your keys, not your coins,” it’s a reference to your private key.
Privacy Risks of Investing in Bitcoin
One of the first claims made about cryptocurrencies was the promise of anonymity.
At first, that may have seemed the case as crypto transactions only exposed your public key or electronic address — never your real identity. Therefore, you can buy and trade under an alias without a monetary authority tracking you.
Alas, this anonymous trading utopia has never been that simple, and here’s why.
Bitcoin is Not Fully Anonymous
Bitcoin, Ethereum, and other cryptocurrencies have never been fully anonymous. Instead, they are “pseudonymous”, which allows you to trade under a false or different name.
Many exchanges are now demanding you go through a Know Your Customer (KYC) and Anti Money Laundering (AML) verification process for security and legal reasons. In simple terms, they require your real name before you can trade with them.
So without using a VPN, you risk leaving an IP trail that exposes your real-time location and Internet history in a stroke.
Using a VPN for Bitcoin Trading
A VPN hides your IP address giving you greater anonymity online. You can trade more securely with one as it encrypts your Internet connection to an external server, ensuring your data is secure.
Fortunately for Bitcoin traders, most crypto exchanges use HTTPS end-to-end encryption, so hackers cannot intercept your data that way, unless your device is subject to critical security vulnerabilities.
What a VPN does though is add an extra layer of security, making your online activity anonymous.
Why “No Logs” and “Kill Switch” Matters
If you trade in cryptocurrencies, using a VPN that has No Logs and a Kill Switch option is vital.
- No Logs
A no-logs VPN will not track the websites you read, what you download or stream, or what you type into Google.
If you’re serious about security and privacy, it pays to use VPN software with a no-logs guarantee.
Free VPNs have different funding models and may sell your data as part of their business model, thereby compromising your privacy.
- Kill Switch
The Kill Switch feature is essential for crypto traders, as it automatically disconnects your computer, phone, or tablet from the Internet until your VPN connection returns.
It ensures your connection is always encrypted, so hackers will find it difficult to intercept your data or identify your real location.
Bypassing Crypto Geo-restrictions
You can also access geo-restricted crypto exchanges with a VPN by switching your IP address to overseas locations.
For example, let’s say you’re in Delhi, India, and want to access a crypto exchange in New York. You can switch your IP address to an American one and trade as if you live in the United States.
Also, while you’re trading with a VPN, you can do so, safe in the knowledge you’re not leaving an online trail.
Protecting Your Financial Privacy
If you trade in cryptocurrencies, you’ll already know there are little or no regulatory protections in place, even if you get hacked by nefarious practices.
Ultimately, it’s up to you to protect your online wallet. If you use a VPN, you can trade with greater confidence, knowing you have an additional security layer in place.
If you’re a Bitcoin trader, it makes sense to use a no-logs VPN and, better still, one that supports payments in cryptocurrencies.
As while most exchanges are encrypted, you can protect your assets far more efficiently with a VPN than without one.
If you want to protect your Internet privacy while trading on crypto exchanges, you can use Namecheap VPN software free for one month. We accept the Bitcoin payment method, in addition to PayPal, Visa, Mastercard, and American Express.