Considerations on used privacy and security
by Jacky GohMr. Goh, a world-renowned gaming designer, took the lessons from what he learned there about consumer digital engagement and founded Rewards Bunny, a cash-back platform that rewards users for their online purchases in crypto or USD. Visit www.rewardsbunny.com/
Recent news of a $34 million hack of top platform Crypto.com has left investors understandably worried and regulators demanding more stringent oversight of the crypto-currency markets. Add to that a major correction that’s wiped roughly one trillion dollars off of the total value of crypto and you’ve got a perfect storm of anxiety out there. While few investors (of any type of security) know exactly how markets work, they should know whether their trading platforms are safe–or not. The pressing question for crypto right now is whether, given its increasing popularity and acceptance, there is a need to enhance user privacy and security.
Here’s what all traders should know right now: all platforms have a set of rules and regulations to handle security, privacy, and data sharing. Retail traders should opt for established exchanges like Crypto.com and Coinbase, as they tend to have stronger financial capability and the highest safety standards. A reputable exchange will have multiple layers of security which, in the event of an exchange being compromised, should mitigate or prevent further losses.
Data Protection Trust Mark
Some security features, however, are user-enabled. Traders may “opt in” or “opt out” of certain privacy settings that might expose their identity or trading positions. Of course, the less you share the more secure you will tend to be, and the security of your personal data depends on the data protection protocol of each individual platform. For instance, Crypto.com has taken steps to be the first financial technology company to attain Data Protection Trust Mark (DPTM), an enterprise-wide certification. They have already put in place data protection regimes to comply with obligations under the Personal Data Protection Act.
Data protection standards protect users from having their personal data being disclosed as monetization taps on the user data points within the platform. This means that there is no way for a third-party company to specifically pinpoint or contact an individual personally. Targeted ads will work in the sense that the more data points you “fit” vis-a-vis the ad’s criteria, the higher the chances that ad is displayed to you. But online marketers often use “lookalikes,” or mock-ups of their ideal demographic, so if you find yourself targeted, this doesn’t necessarily mean that your data has been sold, simply that you fit a desired demographic profile.
So while you should probably “opt out” of sharing your information, keep in mind that major crypto exchange sites are generally safe for legitimate traders and investors. Suspicious activity, such as money laundering, can and does arise naturally from the unbelievably large amounts of funds that are now flowing in and out of such platforms with less oversight than traditional bank or brokerage accounts. But if you’re not engaged in nefarious activity, there’s little for you–or the authorities–to worry about.
Enter Decentralized Finance (DeFi)
Hacking is still top of mind for many investors, though the news can make it seem more common than it really is. Crypto exchanges hold crypto wallets in multiple, distributed blockchains to facilitate deposits and withdrawal transactions. This is why crypto is often referred to as DeFi–or decentralized finance. The bottom line is that crypto wallets are as safe as the blockchain security itself. Without platforms to manage security, it would depend on how an individual manages his or her crypto wallets, on their access management, and on how they store their wallet’s private keys, aka their passwords.
Most investors, however, prefer to delegate security to a platform so there is a significant amount of trust placed in crypto platforms. We expect that the platform is actually holding the tokens on our behalf and we also expect that their wallets will not be hacked, resulting in a loss that ultimately affects our own account.
The crypto platform or exchange is thus analogous to a bank. Most of us do not hide our money or stock certificates in our own safe–or under our mattress! Instead, we trust an institution to hold these securities on our behalf. In return for our business, the institution provides an implicit–and sometimes explicit–guarantee that our assets will be safe. Because crypto is a digital asset, it is stored on servers rather than in safes. As crypto becomes more widely adapted, some amount will probably be guaranteed by the government, as the FDIC insures bank accounts against losses up to $250,000. For now, however, we must trust the technology and the people–and platforms–behind it.