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1. Am I at risk?

Serious businessman thinking hard of problem solution working late in office with computers
Viktoriia Hnatiuk / Shutterstock
The attacks are shaking the confidence of virtual currency investors.

The most recent attack was aimed at a South Korean exchange site, Coinrail.

While the underlying blockchain technology that powers digital currencies is very hacker-resistant, the crypto exchanges are vulnerable.

The group of thieves that targeted Coinrail got away with about 30% of its currency. In another recent incident, almost $500 million in cryptocurrency was stolen from the Japanese exchange Coincheck.

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2. Will I lose my investment?

Businessman grabs the head concept with business chart on scoreboard
Who is Danny / Shutterstock
Digital currency investors have to accept the risk of losing money.

The security of your investment depends on many factors. How often you use exchanges is a primary one. Many were set up without adequate security.

If you're worried that you could lose money, well, that's a given. The world of cryptocurrency is a gamble.

But the recent hacks have caused values to droop. Bitcoin recently has been trading at its lowest level since mid-November of last year.

3. What's being done?

Montreal, CA - 16 April 2018:  Cryptocurrency coins over tablet screen showing candlestick chart. Bitcoin, Ethereum and Ripple are the top 3 Cryptocurrencies by Market Capitalization.
Marc Bruxelle / Shutterstock
Regulators are getting tougher on virtual currencies and exchanges.

While the exchanges themselves are improving to varying degrees, regulators around the world are cracking down on the industry.

China went as far as trying to ban bitcoin. In the U.S., the Securities and Exchange Commission is requiring exchanges to register with the agency — and is warning traders to avoid platforms that don't comply.

Analysts predict that exchanges that follow the rules and beef up security will be rewarded with more business and bigger profits, forcing other players to get with the program.

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4. How can I protect myself?

Bitcoin currency symbol on old metal padlock, safety concept.
igorstevanovic / Shutterstock
You can protect your crypto investments by spreading your money around.

Japan's Coincheck has been reimbursing its users for their hacked losses. But how do investors avoid falling victim to the thieves in the first place?

One of the easiest ways is by spreading your investments around over several digital coin exchanges.

If you have multiple accounts, then you won't lose everything if one gets hacked.

5. How can I amp up my security?

Young man mining bitcoins at home
Elnur / Shutterstock
Be careful of small crypto coins that may be vulnerable to a 51% attack.

Experts say another smart step is to stay away smaller virtual currencies that might be susceptible to what's called a 51% attack.

That's when hackers are able to take control of more than half the computing power behind a cryptocurrency and make off with large amounts of the digital money.

If you want to play it really safe, you might choose to do your crypto-investing through one of the digital coin funds set up by the household-name financial institutions. But you can wind up stung by fees.

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About the Author

Doug Whiteman

Doug Whiteman

Former Editor-in-Chief

Doug Whiteman was formerly the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and CNBC.com and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."

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The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.