A Guide to Storing your Cryptocurrency with Reduced Risk
Assets with high value have always brought increased attention. Since its inception, bitcoin has risen at least one million times its original price. This has brought about awareness, mostly from investors looking to swipe profits off the crypto market. However, there’s the other type of recognition; the adverse one.
Hackers have set their sights on stealing cryptocurrency from user wallets. In 2017, bitcoin increased by 20 times its price at the start of the year. The Telegraph reported that cryptocurrency crimes had risen by at least 200%, and $225 million had been lost to phishing that year.
The Modus Operandi of these Digital Criminals
- Stolen Private Keys
A private key is a string of letters and numbers that gives you access to your cryptocurrency wallet. It’s just like your internet banking username and password combined into one. A private key, however, is way longer than the typical username and password combined.
If your private key is out in the open, written on a piece of paper lying around or stored on a vulnerable device, your wallet would be accessed by anyone with the key. Hackers steal these keys by installing malware on your device.
It could also be stolen when they snoop on your internet traffic during a browsing session on public Wi-Fi.
- Hacking Hot Wallets on Exchanges
A hot wallet is a cryptocurrency wallet that is ready for use at all times. Since it’s always online, you can make a quick trade with a hot wallet. Immediately you open an account on a cryptocurrency exchange; you’re assigned numerous hot wallets for different cryptocurrencies.
The problem with hot wallets is that exchanges hold the private keys to them. Also, since these wallets are always online, they become more prone to cyber threats. In the case of an exchange hack, your funds could also get lost.
Several digital currency exchanges have been hacked in the last decade, even the top ones.
- Phishing
Phishing is the act of stealing sensitive details from a user by creating a disguised website. Chainalysis, a website dedicated to recording statistics about crypto, stated that at least $115 million in crypto was stolen through phishing.
Phishing could take place through email or forums. Hackers can send you email messages requiring you to take action on your crypto wallet, and then directing you to a fake page. On forums, links could also be sent, which mask the URL of the hackers’ websites.
Tips to Safeguard your Digital Assets
- Never Reveal your Private Key
Remember that anyone who has your private key would be able to access your wallet with ease. There would be no requirement for two-factor authentication. The hacker would breach your account without restraint.
Don’t even show your private key on camera or when you’re being taped. In 2013, on a show, two Bloomberg anchors were gifted with $40 of bitcoin in total, with the private key to one of the anchors shown on television. The whole of the bitcoin gifted to that anchor was immediately stolen.
- Use a VPN before Trading
A VPN is a technology that shields your identity and information from third parties. If you use it while browsing, no hacker would be able to spy on the internet traffic flowing into and out of your device.
If you use hacked public Wi-Fi, your private key or log in details would get revealed to a hacker. This would leave your cryptocurrency wallet exposed. Buying a VPN to protect yourself would be beneficial because hackers can’t get past a VPN encryption to spy on your data.
Also, VPNs prevent ISP and government tracking. This way, your crypto wallet would not be associated with your computer and pegged to your identity.
- Use Cold Wallets
A cold wallet is one that isn’t connected to the internet at all times. This way, your funds get protected from hackers and malware.
The most used types of cold wallets are hardware wallets. When a cold wallet is connected to your computer, you wouldn’t need to type in your private key. Even if the wallet gets lost or stolen, you would be able to get back the funds through a unique code.
You can use top-notch hardware wallets like Ledger or Trezor.
- Spot Fake URL Addresses
Avoid email messages from senders you don’t know. Also, before you click on any crypto wallet URL address, hover above the link to ensure it’s the correct URL address.
Penning Down Thoughts
Since the recent crypto price boom, digital criminals have increased attacks on user wallets. They use a variety of methods like phishing, stealing private keys, and hacking digital currency exchanges.
To protect your cryptocurrency funds, use cold wallets, paper wallets, a VPN while trading, and look out for fake URL addresses.
