VPN for Cryptocurrency transactions - Should you use it?Updated: November 13, 2020
Using cryptocurrencies is an alternative way of using money, investing them to be more exact. You should learn more about using a VPN while doing cryptocurrency transactions - it's a matter of security.
Even if you started recently, even if you've been there since the big boom in cryptocurrencies, you should learn more about using a VPN while doing cryptocurrency transactions. It's a matter of security, and you have to have the highest security level when it comes to your own money.
Generally, if you use the right platforms for exchanging cryptocurrencies, you should be safe. But that doesn't mean you can't be exposed to cases of phishing, scamming and others. There are people who are trying to obtain cryptocurrencies in illegal ways, so why give them the chance?
Of course, your own responsible behaviour should be "in place" when it comes to your online security, but let's see some details about cryptocurrencies and cyber security.
If you already know about how a VPN works, then head right and click on the desired paragraph from the Table of Contents.
In one of our articles, we described a bit the history of cryptocurrencies. How they evolved from ecash (appeared in 1983, developed by David Chaum), DigiCash (1995, an early form of electronic payments, through which David implemented ecash) and b-money (a description published by Wei Dai in 1998). These were the "grandparents" of Bitcoin, introduced in 2009, by Satoshi Nakamoto, even though there were some other cryptocurrencies until then; Bitcoin was the most successful, and it remained in people's minds.
After Bitcoin, a lot more cryptocurrencies appeared, some quite successful, some barely there. As I like to say, they appeared as mushrooms after the rain. Bitcoin had such a big impact, that all of the other cryptocurrencies were "altcoins", meaning alternative coins.
Even though after 2017, when it was the big boom for Bitcoin (it's value got up to $20.000), things started to change (the values dropped a huge amount), people are still interested in using and buying cryptocurrencies, even mining them.
And as with everything that's online, you should stay aware about all the scams that can happen to you, and you should prevent them as much as you can.
Cryptocurrencies are just "there", you can't find them lying around the web, and pick them up. The cryptocurrencies transactions usually take place under a platform, such as eToro. There you can exchange your currencies into cryptocurrencies, you can do the other way around, and you have a wallet for all of your cryptocurrencies.
As with any other platform, you'd have to create an account. Which can be the first threat that you can expose yourself to, which is why you should have a strong, unique password. Some of the platforms may offer two-factor authentication, which is even better. Nonetheless, as hackers want to obtain as much virtual money as they can through illegal ways, you should try from the first step to keep them away: secure your account as best as you can.
KYC - Know Your Customer; it's one of the procedures of the AML verification
AML - Anti-Money Laundering
In order to combat the fraud and the money-laundering, most of the cryptocurrencies go through a verification. Nobody (you know what I mean) wants to be a part of a fraud, hence Bitcoin and other cryptocurrencies are pretty easy to track - they are pseudonymous. The cyprtocurrency transactions are stored rather publicly, and there's also your IP that leaves a footprint.
Sure, there are other privacy coins, which are more difficult to trace (for example, Dash and Monero).
From this security point of view, it's on you what you choose: use coins that can be traced easily, or use the privacy ones.
I do remember that a few years ago, the general opinion was that if you use a VPN, you are doing some not-so-legal stuff on the Internet. People didn't focus that much on online security, and maybe thought that a VPN is only there to help you disappear from the Internet. If you have nothing to hide, then why hide? I do have to mention that I'm excluding the private companies VPNs, which I'll mention a bit later.
Luckily, nowadays there are a lot of VPN out there (much like those mushrooms after the rain). People understood that their online privacy is truly important, and it can be demolished in a matter of seconds. Credit card data, browser activity, phishing, viruses and so many more can do them harm, so why not protect against them?
The term VPN is short for Virtual Private Network. It was mostly used by companies, and still is, because they may have employees who work from home, and who need to connect to the companies network. In this way, they ensure a somewhat level of security; they need an account with which they can access the company's network, otherwise the won't be able to do so.
For the public eye, the VPN are there to help you with a bunch of things related to online privacy and security.
1. You can connect to websites that are not available in your country, because your IP changes. With the GDPR in place, and with other laws from particular countries, you might find it difficult to connect to a website, because it only allows users from the area it's based in. For example, as a European, I can't access the https://www.staples.com/ website. What I can do is use a VPN, and choose the server to be based in USA (keep in mind that some VPNs let you choose the server, some do not). Once the VPN is activated, I refresh the Staples page and voila, I can access it. Regarding the GDPR part, you should know that you might not be protected if you do this - here's more on the matter https://www.drsoft.com/2019/02/28/is-gdpr-affecting-vpn-providers-whats-there-to-know/
2. The ISP or others that want to see your activity, won't be able to do so, because, again, your IP changes. I'm sure you remember that when you want to access Incognito mode on your browser, the first thing that appears is related to the fact that even though your search history and downloads won't appear on the computer, the ISP can still see your activity. And it can, as they are the ones who own the network. It's just like a huge private companies, that can check the employees's activity if it's necessary.
3. Connecting to public WiFi or to weakly secured ones is possible without having the fear that someone can hack your computer. One of the reasons I mostly use a VPN is to connect to poorly secured WiFis or public ones. Hotels, WiFis in the park, cafes, restaurants etc, all can be a target to even a beginner hacker (as there are videos online on how to crack a WiFi, and have access to all the data that comes through it). You should connect to your accounts while connected to such a WiFi, and you certainly shouldn't make some online purchases. In case you don't have any alternative, use a VPN. If you don't have one, at least restrain yourself from these actions or use the Mobile Data. https://www.drsoft.com/2019/08/04/is-4g-more-secure-that-wifi/
4. You're protected from man-in-the-middle attacks and others. This point is related to the one above. A man-in-the-middle is the one who intercepts the connection you have, and can alter it. It's just like having a landline phone in your house, with two phones; you answer one of them, but your brother picks up the other phone, listening to all of your conversation - this may sound like prehistoric for some, but just watch some 1990-2000 movies. To protect yourself from this kinds of attacks, use a VPN. Even if the connection is intercepted, he won't be able to "read" it because it's encrypted.
5. You're protected from malware. A VPN service makes you anonymous in the online world, and encrypts all the traffic exchange between your device and the internet. Therefore, it's a great asset to protect yourself from malware. If a website is infected, it will basically try to infect a virtual IP, hence it won't succeed, and, most importantly, you will be safe.
6. You can play games which are not available in your area, and you are safe from DDoS attacks. This is similar to the websites' point. Still, there's a catch: you have to be sure that the online game you're trying to play doesn't have rules against VPNs. Also, the DDoS attacks will do nothing to you, as the attacker will...attack a virtual IP. https://www.drsoft.com/2019/02/28/vpn-for-gaming-to-use-or-not-to-use/
7. Streaming movies which are not available in your country will be possible with the right VPN. More similar to using a VPN for gaming, you can use a VPN for streaming movies. Still, you have to find the right VPN, as many services like Netflix banned some VPNs. When you find one, you'll be able to access contents available for another country.
8. Making transactions through PayPal. In some cases, when you're traveling to not so popular countries, you might need a VPN also for PayPal transactions. If you connect to your PayPal account and try to transact some money, you might have the surprise that you can't because PayPal think the transaction is unusual, and it blocks it. A useful idea, because it minimises the stealing incidents, but a bummer when you're in need of money in a foreign country. With a VPN, you can connect to a server that's from your own country, and continue with your transaction.
9. Access websites while at school. For this particular point, there are some ideas that need to be well understood, so I'll leave you with a whole article based on this subject: https://www.drsoft.com/2019/09/15/vpn-at-school-tips-for-parents-and-teenagers/
10. Protect your Playstation. As you can connect to the Internet right from your PlayStation console, you can expose it to the same threats as you would with a computer. Only for this particular reason, a VPN is useful. But you can also connect to servers from other countries, where games can be cheaper, you can boost your speed, and you'll also be protected from those DDoS Attacks. https://www.drsoft.com/2019/04/29/6-tips-on-how-to-secure-your-playstation-account-console/#h-item-advantages-of-using-a-vpn-on-a-playstation-console
I began telling you all the benefits, but it's better to also explain you how a VPN works.
The basic principle of the Internet is that you are requesting and receiving information from databases. It all happens in a matter of milliseconds, so you don't realize it. You're requesting the information you want to receive, but, in order to receive it, you have to have a some kind of an ID; it is called IP. In this whole process, there are servers involved, so they have to know who requested the info, and who should they send it to.
This is the most basic explanation I can give you. But there are a lot of factors that intervene:
- where you connect from;
- the network you're using;
- the ISP (Internet Service Provider) which controls the network and can see your online activity;
- the government which can ask for access to see your online activity;
- hackers who can crack the WiFi you're connected to, and can steal/see your data;
- even the companies, when you browse from the work computer.
I get that you have nothing to hide, but is it really a good thing to be so exposed? I don't really think so, that's why you can use a VPN.
As I exemplified above, the VPN is there to change your IP, so that none of the above can happen. VPNs works with servers from all around the world, and when you use one, your first connection will be to that particular server. After that, the VPN's server send the information further along, but with another IP. Whoever wants to trace you, can't because they will see an IP from Mexico, for example, instead of USA.
Then, the information is sent back to the VPN's server, which sends it to you. Again, this happens in milliseconds, and you won't even feel that there's a difference in speed (even though some say they do; I think it depends on various factors).
I had to explain all of the above, so that you can create a bigger picture and better understand how does a VPN work, and how can it help you with the cryptocurrencies transactions.
Of course, most platforms for coins are designed to have the best levels of security. You can live well without using a VPN, in case you only use the best known platforms, and you don't do online shopping with virtual coins.
Still, there's nothing wrong in adding an extra level of security to your transactions, especially if you:
- have to use a public WiFi;
- want your data to be encrypted and safe;
- don't want to be attacked in any way;
- want to shop online using bitcoins.
Taking these into consideration, using a VPN for cryptocurrency transactions will help you be safer online, therefore it's recommended. Still, you shouldn't use any type of VPN you find online.
One of the key characteristics of a VPN is that is should have a no logs policy. This increases the level of security, as your activity won't be stored in the VPN servers.
Another characteristic is the kill-switch function. If there is something wrong with connecting to the VPN servers, the VPN should automatically kill your Internet connection. In this way, you won't be accidentally exposed.
And the last idea that needs to be mentioned is that the free VPN usually come with some bad "perks". They can have a DNS leak, they may not be encrypted, and so on. Find a VPN that has the best features, so that you wouldn't fall in a trap. Even thought most of these VPN are subscription-based, it's worth investing a little money, rather than being exposed and losing your data and your cryptocurrencies.