Why a VPN Matters for Crypto Users
Tags: Privacy, Bitcoin, Ethereum, Cryptocurrency, Finance

Why a VPN Matters for Crypto Users

Protecting your internet connection could save your funds.

Crypto users are living in the wild west of the new money frontier. With so many threats emerging against this nascent decentralized economy, it’s incumbent on all of us to stand guard and remain educated about how to protect our blockchain assets. Self-managing your future wealth requires responsible stewardship of its security, after all. A VPN adds a layer of protection by encrypting your web traffic so nosy data snoopers can’t see what you are up to and steal your data.

I first learned about the benefits of a Virtual Private Network (VPN) during the time I spent behind the Great Firewall of China. I was there in the summer of 2009 when Facebook and Twitter had been blocked because Xinjiang independence activists were using the platform as part of their communications network. YouTube had already been blocked by Chinese Internet Service Providers (ISP) for over a year at this time.

For Chinese young adults accustomed to government censorship of the internet, using a VPN to overcome jurisdictional restrictions was no secret. Nowadays, people worldwide are opting for VPNs to help protect their privacy and shield their online activity from prying eyes.

What Is a VPN?

To understand what a VPN does, it’s helpful to understand the process of connecting to a website. When you open a web-browser and type in a website’s domain name, your web-browser connects to your ISP’s DNS (Domain Name System) server to search for the IP address of the server the website is hosted on. While domain names are easy for people to remember, computers access websites based on IP addresses. Your internet activity goes through your ISP, and they route it back to you, using your IP address. Yes, even you have an IP address which is assigned to you by your ISP (https://whatismyipaddress.com). It’s what websites use to send information back to you.

^ So what does this mean?

Think of your smartphone. When you want to call your friend, you probably don’t dial their phone number from memory. You likely enter their name in your phone app or contact list and simply tap their name (and some of us just ask Siri). Your phone then dials the number for you. This is similar to what happens when you visit a website. You type the website’s domain name in the web browser and hit enter. The web browser looks up the website name on your ISP’s DNS server (the contact list), finds the IP address (the phone number) and connects to the website. If I enter https://www.exodus.io into my web browser, my ISP connects me to 54.93.122.248.

While I was in China, the IP addresses of Facebook and YouTube were, and continue to be, blocked. How is this achieved? Well again, let’s think of your smartphone. When you want to block a number, you have that option since you manage your contact list. While browsing the web, your ISP manages the “contact list” because they are hosting the DNS server. When you enter the name of a website has been restricted, your ISP will not establish a connection to it.

One of the things a VPN can do is connect directly to DNS servers across the globe, bypassing your ISP. In the context of my experience in China, I used VPN as camouflage. My Chinese ISP could not detect I was accessing Facebook because the VPN software was transmitting data using an encrypted tunnel to a server in the US. The data being returned to me was also going to an IP address assigned by my VPN (rather than the one assigned by my ISP). I was able to access Facebook in China because technically, my IP address was no longer in China’s jurisdiction and I was no longer using my ISP’s DNS server. I had taken that control away from them.

Why Does Any of This Matter for Someone Holding Crypto?

Most of us can access Exodus or Binance just fine. However, there is a lot more to a VPN than just bypassing internet censorship or hiding your browsing activity from an ISP.

VPN adds another level of privacy and security.

Imagine you are using public WIFI while you are trying to secure some quick gains on that massive new [insert poop emoji] coin pump taking place right now! Or even just checking your email from a coffee shop. Any computer in between you and the server you are connecting to can see your usernames and passwords or any other sensitive information if it is not encrypted with an SSL certificate.

Encrypted data.

Your Exodus wallet uses SSL encryption to transmit your data which provides a layer of security. This means your signed transactions, data sent during wallet backup, and other wallet processes are encrypted. Unfortunately, this layer of security is not always enough.

Man in the Middle Attack

On public networks (or even a hacked home network) Man in the Middle Attacks occur whereby a hacker intercepts your web traffic and relays the data to their own server with the ability to alter the communication between you and your intended destination. With the right tools, skills, and determination, your SSL encrypted web traffic is still viewable to lurkers using some easily available software. This can be as effortless as walking into a Starbucks and creating a hotspot labeled Starbucks. A hacker waits for their victim to connect to the fraudulent Starbucks wifi and uses SSL stripping tools to view transmitted data in plain text.

A VPN encrypts web traffic before sending it out. Your VPN provider does the same when data returns. The encrypted data can only be deciphered by the encryption key holder which is shared only between the VPN’s server and the VPN software on your computer.

A VPN provides an additional layer of encryption and negates SSL stripping by moving your data through an encrypted tunnel ensuring all network traffic is routed to the end point.

What a VPN Won’t Do

Don’t get a false sense of security! A VPN is not an anti-virus nor does it detect scam websites. It doesn’t protect against malware or malicious downloads. Your VPN does not check if you are visiting a scam or phishing website (I suggest MetaMask for this). Why would they? One of their primary objectives is to guard your privacy, not monitor your web traffic.

A VPN is only a small part of a secure setup. Do not assume just because you are running VPN software, you are totally in the clear of all online dangers. VPN can certainly help reduce the avenues of attack, but there are more tools and practices, many of which are necessary, that reinforce a cohesive system of protection.

Please reserve the Medium comments section for lively and honest discussion about the article! If you have technical issues with Exodus, our Community Support team will be happy to speedily assist you if you send a descriptive email to: support@exodus.io