Cryptocurrencies have been on an upward trend and continue to grow quickly. In 2021, 23.16% of Americans reported that they owned some form of cryptocurrency — that’s around 59.1 million investors.
If you’re looking to get involved, you’ll want to make sure you’re secure. That’s where a VPN comes in.
You’re probably wondering how a VPN helps secure your cryptocurrencies, and whether it’s worth it.
In this article, we’ll take a look at how a VPN can help protect your wallet and examine the best VPN for cryptocurrency.
What is cryptocurrency?
Cryptocurrency is a decentralized form of digital currency that’s based on blockchain technology.
By decentralized, we mean that it’s not controlled or monitored by a single organization or bank. There’s no bank monitoring the creation and distribution of cryptocurrency.
Blockchain refers to a decentralized and distributed ledger that records the transactions of this digital asset in code. All transactions are recorded in “blocks” that are attached to the “chain” of previous transactions.
Each person who uses a cryptocurrency has their transactions recorded in the blockchain, which is updated automatically by the software. Everyone has a copy of the blockchain, and everyone’s copy is updated at the same time to ensure all records are accurate.
All transactions are checked using one of two validation techniques to prevent fraud. These are proof of work and proof of stake. Verifiers are rewarded with a crypto payment of their own.
Proof of work refers to a method of validating cryptocurrency trading where a computer must solve a mathematical problem provided by the algorithm. This requires a monumental amount of computing power and energy.
Proof of stake is used to reduce the amount of power required to validate a transaction. It involves a verifier putting up their own cryptocurrency as collateral. If they’re chosen to verify the transaction, they get some cryptocurrency in return.
There isn’t just one cryptocurrency — there are more than 5,000 different kinds of cryptocurrency currently in circulation.
The most popular of these include Bitcoin, Ethereum, and Dogecoin.
While many individuals purchase cryptocurrency as a form of investment (like a stock), it’s an accepted form of payment at one-third of US small businesses. Many businesses are beginning to accept crypto transactions, specifically Bitcoin payments.
Cryptocurrency uses encryption technology to secure the creation of new units and to verify transactions. It’s a highly secure form of currency, but it comes with its risks. The value of cryptocurrencies is extremely volatile.
Rather than a bank managing and maintaining the currency, that task is given to cryptocurrency users across the internet.
Should I use a VPN for cryptocurrency?
A VPN is worth it for cryptocurrency. It can improve your security as it relates to your privacy as a buyer and seller.
As we mentioned, crypto trading is recorded in a public distributed ledger. There’s information recorded that could be used to reveal your identity.
Cryptocurrencies aren’t truly anonymous — they are pseudonymous. That is, your transactions are recorded under a pseudonym.
Your IP address is left behind at every crypto exchange (anywhere you buy and sell cryptocurrency). Hackers can use this information to exploit vulnerabilities in your internet connection and find your identity.
And there are many scams out there. In fact, scammers have made more than $18m in the first three months of 2021 through crypto exchange scams.
However, we don’t recommend you use a free VPN. They could expose you to security breaches, especially if you do a lot of Bitcoin trading.
Using a VPN connection for your crypto trading is quite straightforward.
There are no special Bitcoin VPN servers to connect to. As long as you have a subscription to a premium VPN service, you’ll be able to get top-notch protection.
Simply connect to a VPN server and your internet activity will be disguised. Rather than your IP address showing up on any crypto exchanges, the IP address belonging to the VPN server will show up, making you untraceable.
All of your internet traffic will be routed through an encrypted VPN tunnel. If you’re using a reputable VPN service, no hacker will be able to bypass the encryption.
Which VPN should I use for cryptocurrency transactions?
Let’s take a look at some of the best VPNs to use for your cryptocurrency transactions.
ExpressVPN, a premium VPN service with over 3,000 servers in 94 countries, is our top choice for VPNs.
What matters for cryptocurrency is how secure the VPN is. With that said, ExpressVPN uses the highest standard of encryption out there. You’re protected with AES 256-bit encryption.
AES 256-bit encryption is symmetric. The key used to encrypt your data is the same key that can decrypt it. It’s next to impossible to decrypt in any reasonable amount of time — a powerful supercomputer would take billions of years to decrypt it.
Another great security feature is perfect forward secrecy. Whenever you log in to the VPN, your encryption key changes. All of the information you send out in one session is unrelated to the next session.
If someone were to work a miracle and intercept your data, anything before or after your current session would have a different encryption key and be secure.
You’ll also appreciate ExpressVPNs split tunneling and automatic kill switch.
The former lets you encrypt part of your traffic — like your crypto exchange — while using your original ISP connection for other things. The ability to pick and choose what’s protected by the VPN is priceless.
The automatic kill switch will terminate your connection if your VPN drops. You won’t accidentally purchase cryptocurrency thinking you were connected when you weren’t.
SurfShark has rave reviews as a relatively new VPN. Its low price, coupled with high speeds and excellent security features makes it one to consider.
It’s a very secure VPN with military-grade encryption (AES-256-bit encryption, the same offered by ExpressVPN). This level of encryption is used by the government and military to protect its data from hackers. If it’s good enough for them, it’s good enough for us.
SurfShark has RAM-only servers. This means that as soon as you switch off your VPN, all of your data is wiped. There is absolutely no trace of your internet activity left behind.
We tested SurfShark to see if it had any DNS leaks. A DNS leak is a security flaw that exposes your real IP address, rather than masking it with the VPNs. And SurfShark passed, keeping us secure around the clock.
There’s also the MultiHop feature to consider. It doubles up your protection by routing your traffic through two VPN servers rather than one. It’s an excellent security feature for anyone trading cryptocurrency or even just doing any online banking.
NordVPN’s security is up to par with the previous two VPNs.
It uses the same encryption, AES 256-bit, which is virtually impenetrable and perfect for crypto trading.
NordVPN also has the features you would expect from a premium VPN provider, like a kill switch and split tunneling. Worth mentioning is that the kill switch isn’t automatic and must be set up.
The VPN also passed our DNS leak test, keeping our IP address secure at all times.
One feature that’s quite useful for staying secure is Double VPN. It’s similar to SurfShark’s MultiHop feature in that your traffic is routed through two VPN servers instead of one, for double the protection.
It has a no-logs policy, so the VPN will never record anything related to your internet activity.
Lastly, NordVPN is located in Panama, outside of the 5/9/14 Eyes Alliance. Countries in the alliance, like Canada and the US, have intrusive policies allowing them to request access to VPN data. But because NordVPN is not in a country that’s a part of the alliance, it’s completely safe.