Trading Experts Advise Against Using Credit Cards for Cryptocurrency Trading

The Crypto market has become a popular and profitable instrument of the digital financial market in which investors and traders worldwide invest a significant part of their savings. Even commoners (not traders or investors buy profession) are using cryptocurrency in the hope of making money. There are many ways to acquire crypto tokens, but trading is considered the most prominent. Check out what a bitcoin investment is if you want to start trading bitcoins.

Currently, there are different exchanges available for cryptocurrency trading. These exchanges are necessary for the market players to buy and sell currencies conveniently. But most of these platforms suffer from security flaws because a large amount is stolen from the user accounts. Hackers have found yet another channel by which they can steal cryptocurrencies- the credit card payment system. 

According to the latest news, a well-known digital asset trading platform has been hacked. The compromised credit card payment system utilized by the exchange has also been hacked. Now, hackers are using this loophole to raid user accounts and steal cryptocurrencies worth millions in a single go. Credit card payments are used for various purchases, but this time, it has become an easy source for hackers for cryptocurrency acquisition.

Some common reasons

In a recent post, it has been claimed that the hackers had stolen over $1 million worth of cryptocurrency into their accounts after they hacked an exchange's credit card payment system. After gaining access to the payment system, they obtained customer data, including account details, transaction history, and passwords. 

However, hackers are not only stealing cryptocurrencies; they are also running away with hundreds of millions of dollars worth of investors’ fiat currencies. As a result, several exchanges have started the initiative to remove credit card payments for cryptocurrency transactions to prevent such thefts from happening again. Bitfinex has already announced the same.

Submit banking details in exchange:

Most people use a credit card and bank account details for online shopping. It includes cryptocurrency trading as well. But a greater risk of getting hacked is observed when you give away your credit card or bank account details to cryptocurrency exchanges. It is because cybercriminals are breaking into the accounts of major cryptocurrency exchanges and making fraudulent purchases through credit cards. As a result, they get thousands of dollars worth of cryptocurrencies. 

The hackers made around $1 Million worth of bitcoin transactions in a single night using the credit card payment system. Earlier this month, Bitfinex, one of the biggest Bitcoin and Ether exchange platforms based in Hong Kong, was hacked. Hackers used a repetitive withdrawal system to make multiple withdrawals (amounting to 120 per day) through their credit card accounts. The hackers have made around $70,000 worth of cryptocurrency transactions using the same credit card system.

Lost bitcoins due to the wrong transaction:

After the hacking incident, both Bitfinex and Bithumb have recovered their cryptocurrencies. But with large-scale hacks like these, there is a possibility that customer funds might also get stolen. For example, a recent security breach of one of the biggest Bitcoin exchange websites showed that hackers could break into accounts and make fraudulent transactions without significant difficulty. It means they can use the stolen credit card details to the fullest extent. 

On the one hand, you are using your credit card to buy cryptocurrencies, but on the other hand, you are giving them a chance to steal your hard-earned money. You can use cash to make purchases and transfer cryptocurrencies, but adding a credit card detail may cost you more than you think. If you don't have ample funds, use cash and make transactions through it instead of using credit cards.

Pay transaction fees:

Bitcoin transactions are free of charge. If a transaction gets completed, then there will be no cost from its side. But this is not the case with credit card payments. While making the payment through credit cards, you will have to pay a transaction fee charged by different financial institutions on every transaction. You can avoid paying such fees using other payment methods like cash or bank account transfers.

You may face a daily limit:

You will have to pay a hefty fee using a credit card to make cryptocurrency transactions. The transaction volume of credit cards is restricted; hence, investors may only use them for a small number of transactions. Also, you may face daily limits on using credit cards for making crypto transactions, so it's best to stick with cash payments.