Keeping cryptocurrencies safe is a typical concern among new and seasoned crypto investors. Just like we secure cash in the bank, we need to secure our cryptocurrencies as much as possible.
A 2018 report by The Wall Street Journal reported that about 20% of total Bitcoins in supply had been lost.
These could have been lost in transactions or because of forgotten private keys. However, cryptocurrencies are often lost in theft and digital identity fraud.
In 2018, Coincheck, a crypto exchange based in Tokyo, faced one of the biggest losses. The exchange was hacked and $534 million worth of NEM tokens were stolen. The hackers exploited the exchange’s weakness in storing assets in hot wallets.
Although securing cryptocurrencies can be challenging, there are several best practices that every investor should know.
First, let’s start with discovering the risks that come with owning cryptocurrencies and the importance of blockchain cybersecurity.
Common Risks Associated With Cryptocurrencies
- Sensitive information theft including private keys
- Phishing attacks
- Investment scams
The Importance of Crypto Security
What makes cryptocurrency security essential? Let’s dive into it:
1. Prevention of theft: Crypto transactions are irreversible. If your assets are stolen, getting them back would be almost impossible. Without the possibility of disputing or reversing transactions, you’ll need security measures to prevent unauthorized transfers.
2. Maintaining anonymity: A lot of investors choose cryptocurrencies because they offer privacy in anonymity. But user identities can be exposed if caution is not taken, exposure can lead to various risks including financial loss.
3. Wealth preservation: Today crypto is an active investment option. But without securing your crypto assets, your wealth can be lost.
Key Elements of Crypto Security
To secure your cryptocurrencies, you’ll need to understand the key elements that create a secure environment for crypto assets. Let’s explore these elements:
1. Crypto wallets: wallets are used to store cryptocurrencies. There are two types of wallets; hot and cold wallets. Cold wallets are hardware-based and are generally considered more secure than hot wallets.
To access your wallets, you’ll need private keys that you have to keep safe and preferably offline. Multi-signature wallets offer an additional layer of security.
2. Secure internet: always ensure you use a secure Internet connection when transferring or accessing your crypto assets. WiFi networks are often hotspots for cyber attacks.
3. Exchanges: Different exchanges have different limitations, vulnerabilities, and security measures. Conduct extensive research on the exchange to use. Ensure the exchange includes 2FA, withdrawal whitelists, and cold storage.
4. Education: With cryptocurrencies and crypto investment it is important to stay informed and updated. Especially, research on threats you could face as a crypto owner.
How To Secure Your Cryptocurrencies?
There are a few measures you can take to protect your cryptocurrencies from loss or theft:
1. Use cold/secure wallets: Choose to use wallets that are known for higher security; that is cold wallets. With your private keys offline, the possibility of theft is minimized.
2. Implement 2FA: Two-factor authentication increases security by adding a layer to the verification process. If your password is compromised, the second factor would prevent unauthorized access.
3. Don’t leave your crypto on exchanges: With the exchanges you don’t control the keys. In the crypto space, you may come across the phrase “not your keys, not your money.” It means if you don’t have the keys that control access to your crypto assets don’t belong to you.
The numerous attacks on exchanges where investors lose their funds to hackers are prime examples of why leaving your money on an exchange is not advisable.
3. Keep software updated: Ensure that you use current software for your wallets, updated apps, and devices. Software and application updates often involve security enhancement to protect from newly discovered cyber threats.
4. Use secure internet: It’s advisable to only conduct crypto transactions over a private and secure Internet connection. Public WiFi can be quite insecure; giving easier access to hackers.
5. Be on the lookout for phishing attempts: Actively watch out for phishing attempts. Always check emails carefully before revealing sensitive information or clicking on a shared link.
Always observe a list of email Dos and Donts:
- Verify message sender
- Don’t click links immediately. Hover over shared links to see where they might be leading to
- Notice if URL shortening has been done, for example with services like bit.ly, to hide destination websites.
- Be cautious with messages that have grammar and spelling errors, requests to upgrade accounts, or improper logos.
- Always report suspicious emails.
Conclusion
Although there is no way to 100% secure your cryptocurrency against all types of threats, the few discussed measures can greatly reduce exposure to threats; keeping your crypto investments safe.
Only invest what you can afford to lose. But, if you’re investing large amounts into cryptocurrency, you’ll need to be cautious, and take the necessary steps to secure your crypto assets.
Some of the most important measures are using cold wallets, keeping your crypto assets off exchanges, and using secure internet. Always be cautious and stay updated on cyber threats.
