Security Concerns for Crypto Fuelled as the Market Hits $1 Trillion
News | January 26, 2020, 11:17 AM | Brought to you by a Guest authorCryptocurrencies are virtual money that was introduced as a means of innovative financial technology. The purpose of cryptocurrency was to make the global transaction procedure faster, easier, and more secure compared to fiat currency. Cryptocurrency can allow direct transfer of money to the concerned parties. This digital means of financial assets are designed as an exchangeable medium through cryptography to create global currencies, secure transactions, and abandon supervision in the creation of the currency. However, this innovative technology is not just limited to financial transactions.Data security, protection of identity, and decentralizing economy are the underlying purpose of the blockchain on which cryptocurrency is based. However, the crypto market hitting $1 trillion has paved the way for fraudsters and hackers to target cryptocurrency for their benefits. This blog will discuss how the rise in the crypto market value has fuelled security concerns and how identity verification solutions can eliminate the risk of a security breach in cryptocurrency.
The Cryptocurrency MarketAccording to the CoinGecko report, the cap for the global market cryptocurrencies is $1.003 trillion. Bitcoin has proven to be the market leader with a market cap of $676 B which is followed by Ethereum with total revenue of $236 billion. Tether, Litecoin, and XPR have rounded out the 5 top cryptocurrencies with the highest value. The market capitalization has surpassed the mark of $1 trillion for the first time in history. The closest it fell to was $800 billion in the year 2018 but this time it has hit the record-breaking number.
The Rising Security ConcernsAccording to the report by The Wall Street Journal, around $4 billion was lost in the cryptocurrency scams in 2019. This situation is becoming worse day by day as the value of cryptocurrency is hitting record-breaking numbers. If that is not enough, cryptocurrency has been misused by bad actors for their malicious intent. Several financial crimes, especially terrorist financing, and money laundering are linked to digital currency. With the advent of technology, anything online can easily be a target of scams or criminal activity.Some crypto-related scams listed below:
What can be the Solution?Cryptocurrency can be a risky business due to decentralization. There is nobody to check on these digital assets and fraudsters and scammers are taking complete advantage of them. Global authorities are working on regulating the cryptocurrency with strict KYC/AML Regulations. Both FinCEN and the FCA have laid out proposals to implement the security in digital assets recently.
KYC (Know Your Customer) and AML (Anti-Money Laundering) is a process of identity verification of customers. All banks and financial businesses are obligated to identify their customers to ensure security and eliminate scams. Since cryptocurrency is of value, it must also be regulated with rigid KYC policies. Recently, FinCEN has proposed regulations that limit the deposit of cryptocurrency to more than $10,000 similar to the fiat currency regulations. The crypto wallets and crypto vendors must verify their customers through background checks against global watchlists and verify them to ensure their identity. AI-powered technological solutions to perform online KYC verifications and AML checks can play a key role in securing cryptocurrency. Crypto-related businesses deal with their customers online and verifying their customers can be a problem for them. This is why the online means of identity verification solution can make the procedure simpler, much faster, and accurate, hence increasing the business turnover rate along with remarkable security.