Cryptocurrency values are increasing, and a multitude of investors are taking the plunge and investing in crypto for the first time. Unfortunately, malefactors, cheaters, and other wrongdoers view amateur traders as prime targets. So it is important to steer clear of the potential problems of investing in cryptocurrency by making sure your finances are secure.
In August of 2021, the digital currency exchange Liquid suffered from a security breach in which they lost over $97 million worth of cryptocurrency. In the beginning of 2022, an extra $30 million worth of Bitcoin and Ethereum were taken from Crypto.com, which is a North American exchange.
You may be questioning how you can strengthen your digital security and keep your cryptocurrency from being swiped with all these hits against crypto investors. Should you keep your crypto in an exchange? What about using a hardware wallet? Do you think it would be a good idea to take a picture of your password in case you can’t remember it?
What is a Cryptocurrency Wallet
A digital wallet designed for cryptocurrency, which may exist as an app, service, or a physical storage device like a USB stick, is used to store public and private keys in order to protect your crypto funds. These keys are a sequence of intricate letters and numbers that enable you to encrypt and decipher when engaging in cryptocurrency trades.
Cryptocurrency wallets are not given out or insured by any high-level regulating body, like the federal government, a central bank, or an insurance agency. It is comparable to a bank account username and PIN code or password respectively when contrasting a public key to a private key. Protecting your private keys is indispensable as otherwise your whole wallet could be drained in a matter of seconds.
In general, most crypto wallets use several different safeguards like complex passwords and secret phrases. Cryptocurrency wallets and exchanges have seen an increase in hack attempts, therefore, crypto users need to start taking action to guard their own security.
Ways to keep your Crypto Wallet Safe
Use A Cold Wallet
Hackers who specialize in cybercrime employ complex methods and strategies in order to break into cryptographic exchanges and financial storage systems. Here are our top tips on how you can secure your crypto wallets and reduce the chances of getting compromised:
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.
It is possible to access hot wallets from any location at any moment; meaning they are more exposed to the danger of personal information getting stolen or breached. A cold wallet is generally viewed as being very secure as it is not constantly connected to the internet, but if you misplace it, there is no way to recover it since there is no “forgot your password” feature.
A prime illustration is Ledger, creators of a hardware wallet that provides a high level of security. Your crypto currency’s private keys are held safely beneath multiple layers of protection, in a USB drive encompassing advanced safety protocols.
Check the URL (Avoid Fake Software)
Besides breaking into an exchange, one of the most common scams aimed at getting someone’s cryptocurrency is trying to deceive them into downloading a fake wallet or app.
Fraudsters may offer imitation forms of the prevalent Ethereum pocketbook, MetaMask. They will promote these counterfeit wallets on social media sites such as Facebook and Google.
The most reliable strategy to save yourself from being victimized by this kind of fraud is to download a wallet only from the creator’s genuine website, and shun selecting links in advertisements positioned on search engines or on social media. It is not recommended to rely on the Google Play or iOS App Store searches to discover cryptocurrency wallets since they have been observed to sometimes feature fraud wallets at the top of the results (however unintentional).
Use Two-Factor Authentication for Your Exchange
When you initially purchase cryptocurrency, it is usually held in a trading account. If a hacker is able to get into this account, they can move your cryptocurrency to an address that they own.
One of the simplest ways to guard against these assaults is to first make sure you acquire your cryptocurrency in a secure manner, and then switch on two-factor authentication (2FA) for withdrawals in your exchange platform.
Two-factor authentication requires you to type in a code sent to your mobile phone each time you take out funds in cryptocurrency. It can be irritating when your phone has run out of battery or when it is not close to you and you want to take out your cryptocurrency, however this could also be beneficial as it prevents possible attackers from stealing your digital possessions.
If you have not turned on two-factor authentication, you can only depend on the safety of your log-in details to safeguard your cryptocurrency. It is not difficult for those with malicious intentions to get around these measures.
An aggressive hacker may be able to acquire your password hash from another website and decode it using specialised cracking software, or they could potentially entice you into downloading a malicious file via email, gaining access to your email password, and thus making use of the “reset password” feature to take charge of your exchange account.
These are the usual tactics hackers deploy to take crypto from an exchange; the utilisation of 2FA however, reduces drastically the likelihood of their success.
With two-factor authentication enabled, the hacker must fulfill all necessary steps and also successfully manipulate the telephone service provider into changing the phone service over to their phone. That will enable them to obtain the code you are sending and to get it intended for you. Adding an extra step to the process required for a hacker to make a withdrawal typically makes them abandon the attempt at breaking into a system.
Keep your Seed Phrase in a Safe Place
A seed phrase is a series of 12 to 24 unrelated words that are produced by a wallet program such as MetaMask. You need to type in the exact same group of words that you receive when you sign up.
It is regrettable that there is no way to recover a forgotten password. If you misplace your seed phrase, there will be no way for you to regain access to your wallet. Keep this seed phrase in a safe place offline. Jot it down on a piece of paper and place it in the usual spot where you keep your valuable items.
Don’t enter your Seed Words on a Website
If you employ a wallet attached to a browser, it will regularly request your password. If you restart your browser, it will prompt you to enter your password. If you leave your wallet unattended for a while, it will lock, then require a password once you return.
You’ll get used to being asked for your password.
When initially setting up a browser-extension wallet like Metamask, Coinbase wallet, or Brave wallet, you will need to provide your seed words for authentication.
If you are perusing the internet and all of a sudden stumble upon a page that resembles a wallet application and requires your seed words, then it is likely a malicious site. The most secure approach to take with this is to shut the tab and erase your browser’s cache.
If you suspect your wallet is not working correctly, you can remove it and install it again from a clean browser page. This should assist in ensuring that you are connecting directly with your wallet rather than just a web application located on a particular web page.
The preceding sections have discussed methods of protecting yourself in the event of an attack, but the upcoming two will focus on how to avoid being a potential victim.
Withdraw your Crypto
Exchanges frequently possess billions of dollars worth of cryptocurrency, making them a particularly attractive target for hackers. A strategy for steering around this possibly catastrophic danger is to take out your digital currency from the trading platform when you are not looking to trade.
You need to get a wallet for your computer and install it, then transfer your crypto from the exchange to the wallet address you’ve just set up.
Once this is accomplished, it will be impossible for an individual to steal your transferred digital currency by accessing your exchange account or by attacking the exchange itself. Rather than hacking the exchange, the assailant must then compromise your computer in order to gain access to your cryptocurrency.
While not foolproof, it is likely not worth stealing crypto from you since you are not openly advertising that you store amounts of crypto on your computer as opposed to using an exchange. Finding a way to take out your cryptocurrency can be a straightforward and competent solution to minimize the risk of digital currency theft.
Keep a Strong Password and Change it Frequently
A survey revealed that three out of four millennials in the US have the same password on several devices. It may seem unbelievable, but what is the most frequently used password? Well, you guessed it right! It’s 123456. According to NordVPN’s own investigation, this was the most used password out of a survey of 200.
And how long does it take to crack? Well, hardly a second!
Picture someone investing all the cryptocurrency that they worked hard for into a wallet with this password. Ouch!
On the contrary, passwords that are completely random are the most difficult for hackers and present a significant problem. It’s important to write down your passwords in a secure place in case you can’t recall them.
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
- Randomly generated
Stay Vigilant of Phishing Attacks
An attempt at phishing occurs when cyber criminals try to deceive an individual into providing their username and password for a website that appears genuine.
For instance, you could get a message from your digital currency broker demanding that you promptly change your login credentials as your account had been hacked. This website appears to be legitimate, however it does not actually lead to the exchange indicated. Make sure that the connection is HTTPS secure and is the correct website.
An attack occurred on the cryptocurrency trading platform Wormhole in February 2022, leading to the theft of over $320 million. This serves as evidence that there is no absolute assurance that digital coins can be securely kept in any type of digital trading platform. It is advisable to put your digital currency into both online and offline purses to help control the potential risks.
Avoid Public Wi-Fi
It may occasionally be necessary for you to access the web when you are outside your own home, and taking advantage of the complimentary public Wi-Fi in establishments such as restaurants and cafes may seem to be an attractive choice.
When carrying out crypto transactions, it is advisable not to use free, open Wi-Fi networks. When you access free, public Wi-Fi, it’s possible for individuals in the vicinity to observe your internet data by employing Wireshark or a related program.
They can usually determine if you have been accessing any cryptocurrency websites by analyzing the data they have obtained. In certain cases, they may be able to see your financial transactions.
It is not necessarily the case that thieves would be able to take your cryptocurrency, but a scammer might be more drawn to you if you conduct considerable crypto transactions or regularly visit websites related to crypto. That’s probably not the kind of attention you want.
You can also subscribe to a VPN service to protect yourself from scammers in addition to avoiding using public Wi-Fi.
Subscribe to a VPN Service
Look out for the potential of a man-in-the-middle (MITM) attack when conducting any sort of online transaction, including crypto transactions. Signing up for a VPN service can help protect against these assaults.
In a man-in-the-middle attack, a hacker intrudes on the connection between you and the website you are visiting, introducing their own device to separate you from the site. Next, they transmit your information to the website you wish to interact with, so it appears as if you are linked in the way you usually would be. But now they can monitor everything you are doing.
Man-in-the-middle attacks can be used to uncover what activities you are engaging in on a website. Scammers may become aware of your usage of cryptocurrency, which could allow them to use other tactics in order to gain access to your digital assets such as displaying fraudulent sites to you or attempting to get you to install a counterfeit wallet.
You might consider signing up for a virtual private network (VPN) and utilizing it anytime you carry out cryptocurrency transactions. VPNs usually range from $5 to $15 monthly and if you choose to pay in advance, they can be even more affordable.
VPNs can be used for much more than just cryptocurrency; they are also useful for streaming films and TV shows from other countries, and for preventing your Internet Service Provider from seeing what you do online.
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