If you have invested in cryptocurrencies such as Bitcoin, Ethereum, and others, you are pretty much on your own to ensure the safety of your coin. The government or bank is not going to reverse a fraudulent transaction. Since cryptocurrencies are still unregulated in most countries, you have no legal options to get back your lost crypto asset. In the last few years, there have been dozens of instances of crypto exchanges being hacked. Digital currencies and people who own digital currencies have been popular targets of hackers and scammers. Here we take a look at the top 10 best ways to keep your cryptocurrency safe.
Q4 2019 hedge fund letters, conferences and more
The proof of your ownership is kept on a Blockchain-based decentralized ledger. You need to have a crypto wallet to buy and sell digital currencies, track your balance, and store your private and public keys. Your private key is what you are supposed to keep private.
When you store your crypto token with an exchange wallet, they keep your private key. You are allowed to a access your token by logging into their platform using your email and password. You don't directly own your private keys.
There are two different types of cryptocurrency wallets - Hot wallet and Cold wallet. Hot wallets such as the exchange, mobile, and software wallets are connected to the Internet. You can access them anytime, but they pose the maximum security risk. Cold wallets on the other hand are kept offline. They include paper wallets and USB drives. They are much safer than Hot wallets.
These are the top 10 best ways to keep your cryptocurrency safe.
10- Guard against phishing scams
Be extremely careful with your online activity, especially with scam emails and shady website URLs. Always enter the URL manually and ensure that it uses the HTTPS protocol. Many a times, scam artists and hackers use almost identical URLs and clone the entire interface of crypto websites to appear authentic and steal your data. Only after you have verified these things should you enter your login credentials or private key.
The crypto scam emails have also become increasingly common. They ask you to visit certain website and enter your login credentials. The hacker then collects your username and password to log into your account on the real crypto exchange.
9- Download all software and security updates
If you use mobile and software wallets, they roll out timely updates with security patches to protect your crypto assets from online threats. Always download the updates as soon as they become available. Even better, turn on the automatic updates.
Also, download all the updates to the antivirus software and the operating system on your device. Hackers are always looking for loopholes in apps, websites, and even operating systems that they can target. Some operating systems come with built-in encryption technology, which you can enable from settings.
8- Don't keep all your crypto assets in one place
"Don't keep all your eggs in one basket." We've heard this a gazillion times. If you store your cryptocurrency in multiple places, you'll suffer only a small impact when something goes wrong with an exchange or wallet. Remember that hacking incidents are incredibly common in the crypto world.
Ideally, you should have at least one hot wallet for regular trading and transactions, and two cold wallets for long-term storage of your crypto assets. Since hot wallets are more vulnerable to hacking, you should keep only small amounts in them to keep your main savings of cryptocurrency safe in a cold wallet.
7- Use only secure and trusted wallets
With the growing popularity of cryptocurrencies, there has been an explosion in the number of crypto wallets. Many of them have lucrative features. But they could contain malware to steal your data. Use a regulated crypto exchange that has proper mechanisms in place to ensure the safety of your crypto assets.
A good online wallet is compatible with multiple operating systems, has the latest security features, and an active development team. Don't use wallets that don't give you complete control over your private key.
6- Carry out only small transactions
Making large transactions could draw the attention of hackers and scammers. Criminals are more likely to target people with fat wallets. You don't want to be on their radar. So, try to carry out only small transactions.
5- Don't use public WiFi networks
Never use public WiFi networks to access your crypto exchange account or online wallet. Hackers can easily install malware to track the data being transmitted through public WiFi networks. Before you even realize it, they could walk away with your password and other details. Only use the networks you trust to do crypto transactions. And this rule should apply to all the financial transactions, not just crypto.
4- Use strong passwords for your online wallet
Using strong and unique passwords for each account should be a habit. Don't use passwords that can easily be guessed such as phone numbers, names, birth dates, dog's names, and movies. Use a sophisticated password consisting of numbers, symbols, and uppercase and lowercase letters.
According to a survey, more than 50% people use the same password for multiple accounts. If one of those accounts gets hacked, the hacker can use the same password to access your account on multiple platforms. Also make sure to change your password every few months. You can use a password manager to create a strong, random password.
3- Back up your private keys
Create multiple backups of your private keys and store them in different places such as one at home and another at the office. Having multiple backups will ensure that your crypto wallet remains secure even if you lose your private key or one of the backup devices gets corrupted.
Also, make sure to tell at least one person you trust where you've kept the backup keys. If something ever happens to you, at least the person you love and trust should be able to locate your private keys.
2- Use two-factor authentication or multi-signature wallet
Two-factor authentication is one of the simplest and easiest ways to keep your cryptocurrency safe. It will minimize the chances of fraud when carrying out a crypto transaction. It's the same as two-factor authentication used by banks. Every time you try to log in, the service will send a code on your email or phone that you have to enter within a specified time to access your account.
A multi-signature wallet allows you to give someone you trust access to your wallet. You and the person you've given access to will have to enter separate passcodes before you can make a transaction. This makes your cryptocurrency incredibly safe, assuming you trust the person you've given access to.
Multi-signature wallets are also suitable for businesses. Companies could require at least two executives to sign off on a transaction to prevent fraud or embezzlement.
1- Store your crypto in a cold wallet
Hot wallets get hacked pretty often. If you really want to keep your cryptocurrency safe, use a cold wallet to store your private keys. A cold wallet is anything not connected to the Internet. It could be as simple as writing down the private key on a piece of paper and storing it safely. You can also use a USB drive or hard drive for the purpose.
Many cold wallets such as USB drives work seamlessly with web interfaces. When you plug them into your Internet-connected device, they require you to authenticate the transaction by touching it. It means hackers can't record your keystrokes. Some popular cold wallets are Trezor and Ledger Nano S. You can use them to store your tokens long-term without having to worry about hacking.