The Importance of Financial Security in the Growing World of Cryptocurrency
As cryptocurrency gains momentum and legitimacy, it’s becoming increasingly important for people to pay attention to financial security, says Richard Frost, Head of Technology and Innovation at Armata Cyber Security
The Consensus Web3 and Crypto Perception Survey says that most South Africans have purchased cryptocurrencies. Most have bought Bitcoin (67%), less have bought Ethereum (29%) and BNB (25%). It also found that South Africa is one of the leaders when it comes to the adoption of cryptocurrencies worldwide and 47% of those surveyed call it ‘the future of money’. The South African Reserve Bank (SARB) announced in its Digital Payments Roadmap that it has digital payment plans for the country as it looks into the potential of central bank digital currencies (CBDC).
While banks remain slow on the uptake, there are plenty of ways for people to pay for goods and services in the country. Pick n Pay customers have spent more than R1 million a month on groceries using crypto, says Luno; Deloitte has found that 85% of merchants in their survey are expecting to have crypto as a standard payment option by 2030; and Moneyweb reported that users can now buy anything from a Vespa to art using their hard-earned crypto. Currently, Nedbank and Absa customers can use cryptocurrencies in conjunction with their banking services through their approved providers – Luno and Ovex respectively.
The problem is that crypto isn’t entirely secure and comes with serious risks for users. This has already been recognised by banks like Capitec who suspended their EFT and crypto wallet payments in October 2024 due to fraud. This move flies in the face of the narrative that crypto payments are an easier route for the unbanked as they demystify digital financial management for many people, and bypass the natural suspicion that many people have for financial institutions. Anecdotally, many people opt into crypto because it isn’t a landscape dominated by banks.
Realistically, however, crypto comes with risks that aren’t as easy to identify as those that come with traditional payment methods such as bank cards and cash. The first issue is that often crypto payments can be made anonymously which can have benefits but equally minimises the chances of redress if someone defrauds you. Financial institutions conform to FICA and have systems in place to protect customers that have been defrauded, but crypto can be something of a wasteland where it’s easy to steal money and get away with it. There is no way to track transactions once the money has moved out of the account. Hacking a crypto wallet is a good way of stealing money while staying anonymous.
This really underscores the challenge with crypto – there’s not a lot you can do to protect it. You are reliant on the company controlling the wallets, like Luno, and if someone accesses your account using your credentials and gets through the defences, the funds are gone. The same thing can happen with a bank, but the banks are regulated and there is a chance that you can get your money back.
Which begs the question – can users benefit from the ubiquity of cryptocurrency and its ability to cross borders and wallets with ease while still putting additional protective measures in place? The first is to try and make sure that the payment methods being used are legitimate. Is it a valid person requesting funds from you? So, when you receive an invoice, check that the wallet and details are correct before making payment.
Then, there are the essential safety protocols that should be implemented with your wallet from the outset. Have two-factor authentication, use strong passwords that are too challenging to hack, backup your wallet, place additional biometric or two-factor authentication protocols on all your devices that you use to access your cryptocurrency wallets, and remember to always be aware of scams and phishing.
These methods should also be bolstered by avoiding the use of public Wi-Fi when making transactions, ensuring your devices are up to date with security updates, and that you are aware of trending security issues or threats. If you double-check all these areas before you make a transaction, and stay on top of all transactions on your account, then you will be in more control over your crypto transactions and minimise the risk of fraud.
