As recently as 2021, the global cryptocurrency market was valued at an impressive $1.49 billion.
Despite continual fluctuations, the market continues to grow at an exponential rate and is projected to peak at $4.94 billion by 2030. This reflects a CAGR of 12.8% over the course of the next eight years or so, as third-generation blockchain assets enter the consumer mainstream and drive significantly higher levels of adoption.
Cryptocurrencies are also renowned for being inherently secure and private, but they don’t quite offer the level of protection that most users think.
They certainly don’t provide complete anonymity to users, so do you need a VPN when spending or trading tokens? Let’s find out!
The Truth About Crypto Assets
Whenever people talk about trailblazing cryptocurrencies like Bitcoin (BTC), they often discuss blockchain’s ability for processing secure transactions and maintaining users’ anonymity.
While there’s some truth in this, Bitcoin was designed to allow users an acceptable level of privacy when exchanging or transferring tokens (especially when compared with existing payment methods).
More specifically, BTC transactions are secured using public and private key cryptography. To transfer tokens, each user has a unique pair of public and private keys, the former of which is used to encrypt transaction data as it’s sent from one wallet to another.
However, the owner of the private key (or the recipient) is able to decrypt the transaction data and receive the funds. This means that while anyone can send BTC tokens safely to a wallet of their choice, only the intended recipient is able to ultimately accept the funds.
Such protocols allow for robust security and relative privacy, particularly as Bitcoin and similar crypto wallets can be established without providing your name or an accompanying email address.
However, it’s wrong to assume that crypto assets provide complete anonymity. In fact, even simple web trackers and cookies can potentially compromise your anonymity when using any online service, creating a scenario where cryptocurrency transactions can be linked to an individual user in more than 60% of cases.
The Case for Using a VPN When Trading Cryptocurrencies
Similarly, it may be possible to leverage your unique IP address to compromise your identity and pinpoint your exact location. This is where a VPN may be useful, as you can use a virtual private network to hide your IP address from potential hackers, web trackers and Internet Service Providers (ISPs).
In fact, there are a myriad of benefits to using a VPN when trading cryptocurrencies regularly. Here are a few to keep in mind:
#1. VPNs Secure Your Web Traffic
In addition to masking your IP address and physical location, a VPN will also encrypt your Internet traffic and route this through a virtual tunnel.
This is most effective when accessing a public network, which typically uses basic WPA2 security protocols that remain vulnerable to the machinations of cyber criminals.
In fact, it’s relatively easy for hackers to establish familiar sounding but rogue access points to public networks, enabling them to monitor your activity and potentially intercept sensitive transaction data when you connect. Particularly skilled hackers could even use packet sniffers to monitor your network traffic, or (in the worst case scenario) intercept your wallet keys.
A VPN can protect against this, by creating an additional layer of network security and ensuring that your data is completely encrypted.
This will make transaction data appear as a string of indecipherable code, making it almost impossible to hack or intercept. Similarly, it can disguise your activity and make this invisible to others who are active on the network, including hackers and those responsible for managing traffic.
#2. VPNs Boost Anonymity From the Perspective of ISPs
On a fundamental level, VPNs also hide your activity from ISPs, who may monitor your traffic and the individual sites that you visit.
For example, if you log into your Binance account to buy some BTC tokens, your ISP will be able to see this activity and log it accordingly (even if they’re unable to view the details of individual transactions).
They’ll even be able to log the time and duration of your visits, while referencing precisely how much data has been used to process transactions or synchronise one or more crypto wallets.
This is a deceptively important consideration, as ISP’s are known to throttle bandwidth and effectively increase latency when they observe activities that consume significant swathes of data. This is done primarily as a deterrent, but it could interrupt your trading activity and slow down transactions considerably.
If you use a reputable VPN on your Android, iOS or desktop device, however, your ISP won’t be able to see the exact blockchains or websites that you use. In fact, they’ll only be able to see the IP address of the VPN server that you’re using, making it virtually impossible to monitor your activity or pinpoint a precise geographic location.
Perhaps more importantly, a VPN client will encrypt all of your web traffic, so your ISP won’t be able to identify trading activities that utilise large amounts of data. As a result, they can’t subsequently throttle your bandwidth or lower Internet speeds.
#3. VPNs Protect You From Phishing
Mobile traders can be particularly vulnerable to crypto scams, making the use of a VPN for Android or iOS devices even more important.
Last summer, for example, it was revealed that more than 170 Android apps (including as many of 25 on the Google Play Store) had been caught attempting to scam people by offering fraudulent crypto mining services.
This type of targeted phishing scam is commonplace across all device types, of course, particularly when trying to steal tokens and assets from people. In fact, crypto phishing attacks account for 13% of all cryptocurrency scams, with nearly $9 million in assets being lost or seized everyday as recently as 2018.
Fortunately, installing the best VPN on your Android or desktop device helps to negate phishing attacks of this type, even though a virtual private network doesn’t offer targeted protection in this respect.
More specifically, the market leading service providers tend to use a blocklist, which automatically prevents you from entering known phishing websites online. Many of these will be crypto-related too, as they’re among the best known and most prolific phishing sites.
Of course, VPNs can’t offer direct protection against targeted phishing emails that include malicious attachments.
However, they are capable of providing protection when browsing sites online, especially in instances where you’re directed to a known phishing site through an HTTP link or app store.
The Last Word
While blockchain and crypto assets offer at least some level of enhanced security and privacy online, they’re by no means infallible and certainly don’t provide complete anonymity to users.
Because of this, the use of a VPN is highly recommended, thanks to its ability to hide your IP address, encrypt web traffic and provide direct protection against targeted phishing attacks.
On a final note, we’d recommend investing in a paid VPN service. This will ensure more robust levels of security and 256-bit encryption, while removing the data usage caps often imposed by free providers.