To say that cryptocurrencies have been successful is an understatement. The coins have surpassed all the imaginable performance that was hoped for in the beginning. At the time of the launch of Bitcoin, Satoshi Nakamoto was looking for an alternative to the government-controlled fiat currencies. A few years later, the cryptos not only work as a medium of exchange but are also edging traditional assets as the ideal investment option. Both individual and institutional investors are using cryptocurrencies.
While the blockchain industry has been on the sustained market value increase, its security remains a major concern. The crypto industry is an ideal target for cybercriminals and particularly organised crime. The various crypto exchanges have been on the severe end of these criminals with the platform users losing money due to hacking and other illicit activities.
While the exchanges have explored various ways to stop the criminals, the industry is not secure enough. Not when the $10 million is stolen daily from the exchanges.
KYC and the other security measures
Know Your Customer (KYC) protocol is one of the widely used control measures against crypto criminals. For instance, Swyftx gets personal data like address, identification card or driver’s license details from its users to prevent any illicit activity on the accounts. You can read our reviews of Swyftx and other exchanges to learn more about their security features.
The KYC protocols were thought to work for the crypto due to the ease of identification. Generally, cryptos work on blockchains that record transaction details on the public ledgers. These are then accessible to anyone on the network. However, the details only contain the wallet addresses and the transacted amount. Information that would not be useful when looking for an individual. With the KYC the identification would become easier.
The criminals have since found various ways to beat the KYC protocols. The first option is to use fake documents. One can use documents that are picked or stolen from other unsuspecting people. There are also various sites on the darknet that are willing to sell the needed identification details.
The crypto frauds are also hard to mitigate given the criminals target the less tech-savvy. The criminals take time to vet their targets. This is why, while some frauds like fake giveaways are easy to spot, some people still fall for them.
How could exchanges outsmart criminals?
The security of the exchange users is the responsibility of the platform. It is the platform’s work to ensure their clients’ assets are safe at all times. This was evident when a London court ordered Binance to trace the hackers from its exchange.
The exchanges must still keep the KYC protocols. It has so far acted well in combating money laundering and other illicit activities. In as much as the criminals might outsmart the system, the details provide a basis for investigations in case of any issue. One of the best Australia-based crypto exchanges that provide users with high-level safety measures is CoinSpot. You can read our CoinSpot review to learn more about its unique features.
In the end, the crypto industry might have to open up to more regulations. The decentralised nature of cryptos means regulations have not been clear.
