Table of Contents
- 1 Introduction
- 2 What Actually is a Cryptocurrency Wallet?
- 3 How Often Do Crypto Wallets Get Hacked?
- 4 How to Secure Cryptocurrency Wallets?
- 4.1 Store Your Cryptocurrency in a Cold Wallet
- 4.2 Use 2 Factor (2FA) Authentication
- 4.3 Keep your Seed Phrase in a Safe Place
- 4.4 Use a Secure Password That You Change Regularly
- 4.5 Keep your Investments in Multiple Wallets
- 4.6 Avoid Crypto Scams on Social Media Platforms
- 4.7 Stay Aware of Phishing Attacks
- 4.8 Use a Secure Internet Connection
- 4.9 Always Double-Check the Recipients’s Wallet Address
- 4.10 Use Updated Anti Virus Software
- 5 Conclusion
Because of the security dangers, many people have been reluctant to invest in cryptocurrencies, especially since it is now the investor’s obligation to protect their investments.
Although there is a danger associated with conducting business online, many of the same practices that make you safe online will also keep your cryptocurrency secure.
You must use identical precautions to protect your online banking when securing your crypto wallet. However, there are a few additional steps you may take to safeguard your crypto wallets.
What Actually is a Cryptocurrency Wallet?
An app, service, or physical wallet like a USB stick that holds public keys and private keys and keeps your cryptocurrency safe and secure is called a cryptocurrency wallet. When conducting cryptographic transactions, you can encrypt and decode using these keys, which are strings of complex letters and numbers.
No central controlling body, such as the federal government, the central bank, or an insurance company, issues or insures cryptocurrency wallets. A public key is comparable to a username for a bank account, and a private key is comparable to a PIN or password. You must protect these secret keys to avoid the risk of your wallet being stolen by a crypto hacker.
In general, the majority of Bitcoin wallets provide a variety of security features, including complex passwords and secret phrases. Any wallet cannot be easily compromised; however, cryptocurrency users should start adopting additional security measures due to an increase in attempts to hack Bitcoin wallets and exchanges.
How Often Do Crypto Wallets Get Hacked?
As cryptocurrency is becoming more and more popular, security risks are also expanding and increasing. Attackers can make more money off of cryptocurrencies as more people invest in them. From the start of the outbreak in April 2020, there have been roughly a dozen attacks, and almost $3 billion worth of cryptocurrency has been taken from exchanges.
Hackers have numerous different methods for obtaining cryptocurrencies, including stealing or guessing your password, breaking into an exchange platform, phishing scams, and more. The most frequent attack, nevertheless, is the theft of a crypto wallet’s private keys.
There are numerous things you can do to secure Bitcoin and lower your risk level, even though it’s probably not possible to be 100% secure against every potential assault.
How to Secure Cryptocurrency Wallets?
You can follow these ten guidelines to safeguard your cryptocurrency from hackers. You might not need all ten, but you can choose the level of protection you wish to adhere to by determining how much danger you are comfortable with.
These guidelines apply not only to your PC but also, and especially, to your mobile phone because mobile apps are increasingly popular tools for managing a crypto wallet.
Store Your Cryptocurrency in a Cold Wallet
There are two types of crypto wallets that you need to understand:
- Hot Wallets” Wallets connected to the internet, such as Exodus and MetaMask.
- Cold Wallets: Offline wallets, not connected to the Internet, such as a USB device.
Hot wallets can be logged into from anywhere at any time but come at a greater risk of data theft and breaches.
Cold wallets require some technical knowledge to set up and are considered safer. But if you lose your offline wallet, there is no way to recover your password with the “forgot your password” option.
In a cold wallet, the cryptocurrency’s private keys are kept on a USB stick that is further protected by multiple layers of security.
Additional Read: You Are NOT As Safe As You Think With A Hardware Wallet (Cold Wallet)!
Use 2 Factor (2FA) Authentication
Your account is given an additional layer of security thanks to 2FA. You get a message or email with a verification code whenever someone tries to log in.
By adding this step, hackers will find it more difficult to access your account. They would require this verification code, so they might call and bribe you into giving it to them.
Never divulge your 2FA code, One Time Password (OTP), or any other secret verification code to a third party. Your credentials won’t be requested by a call from the cryptocurrency exchange.
Keep your Seed Phrase in a Safe Place
A wallet provider like MetaMask will produce a collection of 12 to 24 random phrases as a “seed phrase.” You must input this seed phrase in the exact same order that you receive it when you sign up.
Unfortunately, there isn’t a reliable “forgot your password” solution. Hence, without exception, if you misplace your seed phrase, you also lose access to your wallet. Save this seed phrase offline in a secure location. Simply put it in the same spot where you keep your belongings by writing it on a piece of paper.
Use a Secure Password That You Change Regularly
75% of millennials in the US use the same password across various devices, according to research. What is the most popular password, as unbelievable and ludicrous as it may sound? You guessed correctly, then! It’s 123456. This password came in first place among the top 200 most used passwords worldwide, according to independent research conducted by NordVPN.
And how long until it breaks? Not even a second, then!
Imagine someone using this password to access a wallet that contains all of their hard-earned Bitcoin. Who is actually at fault?
The most difficult passwords, on the other hand, provide a significant obstacle for hackers. If you can’t recall them, though, you should also put them in writing and save them somewhere secure.
Here are some tips on creating a strong password:
- Use a combination of alphabets, numbers, and special characters
- Use lowercase and uppercase
- Minimum 8 letters
- Use randomly generated password
Keep your Investments in Multiple Wallets
Never trust just one person with your future. Think about having two dozen eggs. Which is more dangerous? Placing them all in one basket or equitably splitting them into two?
Suppose the basket falls. The eggs would all crack! But what if only one of the two baskets you had fell?
The same idea holds true in the area of trading cryptocurrencies.
Instead of putting all your NFTs and cryptocurrencies in one wallet, divide them into at least two. Preferably, use one hot wallet for day-to-day transactions and a cold wallet for HODLing.
Avoid Crypto Scams on Social Media Platforms
Consider that you are viewing a YouTube video on how to profit from trading cryptocurrencies. Almost 500,000 people subscribe to the channel, and the content creator is well-known in this market. The channel owner asks you to contact them via their WhatsApp or Telegram number to invest with them and double your money somewhere in the comments.
The number is shown, and you add it to your contacts. You join with them and are added to their “exclusive” Telegram group without giving it a second thought. You are now certain that it will present you with a “life-changing opportunity.” You transmit $500 worth of Bitcoin, Ethereum, or another cryptocurrency after a few days with the assurance that you will “get it doubled to your wallet within 24 hours.”
You email the channel’s creator after transferring the money to ask if they received it or not. Unfortunately, you hear, “Sorry friend, which funds? I never requested any payment. Everything in your universe crumbles. This situation is an illustration of a common scam in the cryptocurrency realm.
That individual was none other than a con artist posing as the channel owner. Crypto YouTubers with millions of viewers are pressuring YouTube to act because this is happening at such an alarming rate.
Whether or not YouTube does its part, it is time you realize that there is no such thing as easy money. This is a dangerous scam with obvious red flags. Yet, people fall for it.
Stay Aware of Phishing Attacks
In a phishing attack, hackers attempt to mislead you into providing your user credentials on a website that appears authentic.
- For instance, your cryptocurrency exchange can send you an email requesting that you reset your login and password right away because your account has been hijacked. Although it appears to be a genuine website, the link to that exchange is fake. Make sure that the link is always to the correct website and is HTTPS.
- In February 2022, an attack on the cryptocurrency trading platform Wormhole cost the company more than $320 million. This further demonstrates why you should never rely on storing cryptocurrency in any online exchange, regardless of the level of security. To minimize your dangers, it is preferable to store your digital currency in both offline and online wallets.
Use a Secure Internet Connection
Working from home is a blessing. You can now work remotely for companies by enjoying your favorite cup of coffee at a nearby cafe. But here’s the catch: public WiFi is not secure and definitely not an option when making an online transaction from your bank account or crypto wallet. When connected to public networks, always use a reliable VPN.
Always Double-Check the Recipients’s Wallet Address
The wallet address serves as a means of identifying a sender or recipient of cryptocurrency. This address is a string of special characters, usually between 26 and 35 characters long, and alphanumeric characters. Always verify the recipient ID before sending cryptocurrency to another wallet.
Malicious software has the ability to alter and copy a hacker’s incorrect wallet address. On the blockchain network, a transaction, once completed, can never be reversed. As a result, it’s preferable to be safe than sorry.
Zero-transfer phishing attacks and address poisoning are two infamous scamming techniques adopted by crypto scammers.
The scammers take advantage of the fact that most of the crypto users lack the will to compare and validate each and every character of the 42-char long hexadecimal address of the recipient and their hard-to-die habit of copying the recipient’s address from their transaction history, for making a crypto transaction.
Use Updated Anti Virus Software
Several antivirus solutions offer incredible defenses against crypto-hacking and phishing attacks. To protect your wallets, these applications scan all incoming emails and highlight potential phishing scams.
Invest in licensed antivirus programs and keep them updated with the most recent database.
While that may feel like a lot to do to keep your cryptocurrency secure, it is worth it to protect your investment from hackers.
The easier it is for you to log in and access your crypto wallet, the easier it is for an attacker as well. Plus, any online transaction can be vulnerable, so applying these best practices will not only help you protect your crypto wallet but also your everyday online interactions.
Furthermore, if your cryptocurrency is lost or stolen, the odds of getting it back are pretty high. So it is always better to be safe than sorry.