If you’re in the business of crypto trading and wondering, “Should I use a VPN for cryptocurrency?”the short answer is yes.
A virtual private network, or VPN, works to protect your data and keep your information safe, which is essential when trading cryptocurrencies.
Here’s why you need a VPN for trading cryptocurrency and what to look for in a crypto-friendly VPN.
What Are the Risks of Trading Cryptocurrencies?
Digital security is a tricky subject.
Online privacy and security are achievable once you figure out how to protect yourself, but there’s no 100% guarantee that you won’t fall victim to cybercrime or hacking attacks.
This applies to crypto trading too.
And given that cryptocurrency is completely transparent and trackable, it comes with some additional risks.
Lack of Anonymity
The central tenant of crypto technology is anonymity. But cryptocurrency is more pseudonymous rather than anonymous.
Users aren’t required to reveal their true identity to hold a crypto wallet but all transactions have an audit trail and can be traced back to the creator.
That said, certain exchanges, like Bitcoin, require KYC (Know Your Customer) to comply with regulations.
Susceptible to Hacking
Cryptocurrencies exist in the digital world, which means they can become subject to cyber and hacking attacks.
In the crypto world, arguably the worst type of attack is cryptojacking, where hackers get into a target’s computer and use its computing power to mine cryptocurrency.
These back hat hackers also steal data and might even swipe your digital wallet.
For reference, it was estimated that hackers have stolen a staggering $1.9 billion worth of crypto in the first half of 2022.
Phoney Crypto Exchange Platforms
Crypto scams can take many forms.
Scammers can create fake versions of official crypto wallets or entirely fake “new” cryptocurrency trading platforms to trick unsuspecting victims into investing.
These fake crypto products often quote high returns on investment and require users to pay a high initial fee. And when you try to withdraw your funds, you’ll likely find they’re not there.
That’s why it’s best to stick to tried-and-true platforms, such as Coinbase, which features an integrated wallet, and Binance, a highly secure crypto exchange platform.
Why You Need a VPN for Crypto Trading
Here are some reasons why using a VPN for crypto trading is a good idea:
Access To International Markets
Crypto trading is not universally illegal, but given that it appeals to those who engage in tax evasion and money laundering, some countries prohibit it.
There are some countries that limit the use of crypto as payments and others have strict regulations in place that makes cryptocurrency trading extremely difficult.
A VPN hides your real IP address – and with it, your location– by routing your traffic through one of its servers. This allows you to bypass any geo-restrictions and gain access to any crypto exchange platform in the world.
Reliable Encryption
A VPN hides your online traffic by running your data through an encrypted tunnel.
This prevents snoopers from monitoring your activities and makes it nearly impossible for hackers to spy on your communications– even if they manage to gain access to the network.
This means they would have a hard time getting their hands on your login credentials and login keys.
Anonymity From Your ISP
Your ISP can see everything that you’re doing online– what websites you visit, how much time you spend on them, the device you’re using, and the content you watch.
Using a VPN to buy crypto will prevent your ISP from monitoring your activities and potentially throttling your connection.
They will see that you’re connected to a VPN and the amount of traffic travelling from and to your device. It might also know the port your VPN protocol is using and the time of your connection.
But, your ISP won’t be able to see your crypto trading, what crypto websites your visit, or the files you download.
Hidden IP Address
When you visit a blockchain trading platform, it can see your IP address.
The main risk of a public IP address is the same as its biggest advantage: It allows you to connect to the Internet but it also lets others connect to your device.
Any vulnerability in the connection can be exploited by hackers and other bad actors. They can then use malware to infect your device, steal your data, or engage in cryptojacking, which means having a hidden IP address is a must.
Protection From Phishing Attacks
Phishing is one of the most dangerous cyber threats out there. It comes in different shapes and forms and unlike most cyber attacks, the initial target is the person behind the device, rather than the device itself.
In the crypto world, scammers use deceptive messages to trick people into giving them their private keys or password that would enable them to access a crypto trader’s wallets. They can act as genuine companies to get you to pay fake “fees” or give them your login credentials.
VPNs can’t prevent phishing attacks directly, but most providers offer upgrades and tools – including antivirus software– which block suspicious websites and flag harmful links.
What You Should Look For In A Crypto VPN?
Here are some things to consider when selecting a VPN for crypto trading:
Kill Switch
A kill switch is a feature that allows your VPN tool to disconnect your device from the Internet connection when your VPN connection fails.
This feature can prevent your ISP from detecting any crypto activities and third parties from seeing your real IP address when the VPN is unable to establish a connection to the server.
AES-256 encryption
Some of the best VPNs on the market use AES-256 encryption (also referred to as military-grade encryption).
This encryption algorithm uses a 256-bit key to convert your plain data, such as crypto transactions, into a ciphertext and makes it nearly impossible for anyone to crack it.
It is widely regarded as the strongest form of encryption available for commercial useand can fend off most attacks.
No logs policy
If you’re not paying with money, you’re paying with data.
Free VPN tools can be useful, but they have to generate income somehow. They do that by “logging” information about your online activity, including connection timestamps and traffic logs, and then selling it to third parties.
Most paid VPNs come with a zero logs policy. This means they won’t store any of your online activities, including what crypto sites you visited or details about your crypto transactions, and have nothing to share.
How Do You Trade Crypto With A VPN?
To secure your transactions and eliminate risks of data theft and hacking attacks, all you’ll need to do is turn your VPN on before engaging in any crypto activities.
Here’s how to do that:
- Find a good VPN tool and create an account on the company’s website.
- Download the VPN app on your computer or your phone and log in. Most VPN apps are compatible with a wide variety of devices and operating systems.
- Connect to a server of your choice.
Once the VPN establishes a connection to the server, you can visit any crypto website or log into your crypto wallet.
Bottom Line
The largest risk of crypto trading is that cryptocurrency is transparent. It is anonymous in the sense that you can hold a crypto address without revealing your identity, but bad actors can still connect this address to your IP address and reveal both your location and online identity – that’s on top of the possible risk of cryptojacking.
A VPN can mitigate many of these risks and make sure your crypto activities stay private and secure.
