This content originally appeared on Level Up Coding - Medium and was authored by Dmytro Spilka
Cryptocurrency has taken the world by storm in recent years, with more users than ever flocking to buy Bitcoin, Ethereum, and a number of altcoins to build investment portfolios and embrace digital finance. However, the digital nature of tokens has meant that many users find it difficult to hold their cryptocurrency safely.
Sadly, the cryptocurrency landscape has long been subject to frailties in security, with hackers identifying digital tokens as an excellent target to stealing the assets held by their rightful owners.
As a means of keeping cryptocurrency safe, wallets are popularly used by exchanges. There are also plenty of specialist wallet apps for smartphone and desktop users like MetaMask, Trust Wallet and Gemini.
(Image: Blockchain Explorer)
As we can see from the data above, the number of blockchain-based cryptocurrency wallet users has accelerated rapidly as the likes of Bitcoin experienced rallies between late 2020 and early 2021.
Cryptocurrency wallets behave in a similar way to physical wallets in that they’re a location in which you can store your assets. However, many crypto wallets can also securely convert your currencies and broker electronic transactions.
(Image: Fintech News)
Sadly, security has been a significant issue in the formative years of the cryptocurrency landscape, and hacks had become pertinent across exchanges. Most notably, we can see that Mt. Gox found itself at the centre of a $460 million hack in 2014. Since then, many exchanges have become exposed by hackers — illustrating the importance of using secure wallets.
With this in mind, let’s take a look at ways in which you can make your cryptocurrency wallets as secure as possible from the threat of cyber attacks:
Consider Cold Storage
There’s no better way of protecting your crypto assets than to opt for a ‘cold’ wallet. In a nutshell, cold wallets are the hardware that isn’t connected to the internet — meaning that it’s impossible for your portfolio to be stolen online.
Cold wallets store a user’s address and private key on a drive that’s not connected to the internet, and it will often come equipped with software to enable the viewer to see their portfolio without having to put their private key at risk.
It’s also possible to create a paper wallet — which is arguably the most secure form of storing cryptocurrencies. Certain websites will allow you to create a paper wallet by printing your public and private keys on a piece of paper. This makes accessing your cryptocurrency impossible unless you possess that piece of paper.
For added security, some crypto holders laminate their paper wallet keys and store them in a safety deposit box at their local bank.
There are plenty of hardware-based wallet providers out there, so it’s worth doing your homework if you want to embrace the safest form of possessing crypto. However, it’s important to avoid accidentally losing your cryptocurrency wallet, and thus your cryptocurrency — as some investors have found out the hard way.
Embrace VPNs When Online
As we’ve already seen from the timeline of cryptocurrency hacks that have occurred over the past seven years, holding cryptocurrency online can be risky business. However, it’s also practical for users who intend to trade and hold their assets for a relatively short period of time. Furthermore, for less experienced cryptocurrency investors, it can be far more straightforward using built-in wallets via major exchanges like Coinbase and Binance.
It’s still possible to keep your assets as safe as possible even when stored online, and utilizing a virtual private network before making a transaction or logging into your wallet can be ideal for adding that all-important layer of protection on top of your assets.
Although many exchanges claim to have their own high-quality encryption in place, the industry’s history with fending off threats is patchy, to say the least. By utilizing one of the no-logs VPN services available online, you can trade in confidence, even in public WiFi locations — safe in the knowledge that nobody will be snooping on your assets.
Some crypto wallet apps like Samourai Wallet are built primarily to offer superior levels of anonymity and privacy. The wallet utilizes no address reuse and supports Tor and VPN-based financial management.
Don’t Dwell on Your Passwords
As many as three-quarters of millennials in the US use the same password across more than 10 devices. That’s a lot of distribution, and an awful lot of potential damage should one of those devices fall into the wrong hands.
With this in mind, it’s certainly worth using separate passwords across your wallets. Although it can be frustrating coming up with longer passwords featuring multiple special characters, it’s far better than running the risk of losing your wealth in compromised accounts. Furthermore, if you feel that something isn’t quite right, or if you’ve been using your password for many months, be sure to change things up and generate a new and unpredictable phrase.
Also, be sure to use two-factor authentication (2FA) or multi-factor authentication (MFA) where applicable.
Stay Vigilant on Phishing
The easiest way for hackers to access your wallet is via phishing attacks, where they trick you into entering your password or private key on the fake version of a real website.
Here, it’s vital for you to remain vigilant when entering personal information on websites that you have no reason to 100% trust. Always double check before entering information into a website you accessed via a hyperlink that you don’t usually use, and always look at the URL of the site you’re visiting if it’s asking for login details.
Fortunately, the cryptocurrency ecosystem is maturing at a rapid rate, and the industry’s passage to mainstream adoption has meant that it’s becoming more robust in the face of attacks. However, it’s always vital for you to keep on guard, and remain on the lookout for ways to keep your assets safe. Investing in crypto has always been an exciting ride without the threat of your coins going missing — thanks to cold wallets and VPN encryption, it’s far easier to enjoy the thrill of cryptocurrencies without the fear of losing your assets.
Keeping Your Crypto Safe: 4 Essential Ways to Secure Your Cryptocurrency Wallets was originally published in Level Up Coding on Medium, where people are continuing the conversation by highlighting and responding to this story.
This content originally appeared on Level Up Coding - Medium and was authored by Dmytro Spilka
Dmytro Spilka | Sciencx (2021-09-30T12:26:12+00:00) Keeping Your Crypto Safe: 4 Essential Ways to Secure Your Cryptocurrency Wallets. Retrieved from https://www.scien.cx/2021/09/30/keeping-your-crypto-safe-4-essential-ways-to-secure-your-cryptocurrency-wallets/
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