#Crypto 360
#Blockchain
Crypto wallets are like digital banks where you can store digital assets like cryptocurrencies and NFTs. How to keep your crypto wallet safe?
• Storing your private keys offline in cold storage is much safer as compared to storing them online.
• Some measures to secure your crypto wallet include using robust and different passwords every time, ensuring that you activate the two-factor authentication, and updating your wallet software from time to time.
• It can be risky to use Wi-Fi connections that are open to the public. It is important to ensure that the connection you are using is secure, and if possible, use a VPN to encrypt your connection.
• It is advised to use the services of well-known and reliable crypto wallets with reliable security features for storing your digital assets.
The creation of cryptocurrency revolutionised the finance world. Before its creation, money was limited to fiat currencies and commodities, which were handled and stored primarily in the bank. Before we could use the money or assets, we had to make transactions, and we needed third-party approval. All of this changed with the creation of cryptocurrencies.
Crypto has created a means whereby we do not need to store our money in banks or wait for any third-party approval to make transactions. We can trade anywhere in the world and at any time on the blockchain. However, despite the advantages and excitement, this technology has loopholes and drawbacks. Today, crypto is still experiencing slow mass adoption as it has been plagued with a series of malicious hacks frequently.
According to data from Chainalysis, over $4 billion worth of cryptocurrency has been stolen away by hackers from various crypto wallets globally from 2022 to 2023. These numbers grow every day for various reasons. However, one of the most frequent is that many individuals who use cryptocurrencies to trade are unaware of how to protect their crypto wallets from hacks.
In this article, we will mention the best tips to secure your crypto wallets from hacks and list out the best wallets you can use to store your crypto safely.
Crypto wallets are like digital banks where you can store digital assets like crypto and NFTs. They also provide other options like trading your cryptocurrencies, swapping, staking, lending, and a host of other services which largely depend on your wallet providers. Almost all crypto wallets come with two important components, which are your private key and public key or wallet address.
• Your Private key or seed phrases are private information about your wallet that only you should know. It gives you access to the funds in your crypto wallets. If it falls into the wrong hands, your wallet can be accessed, and the hacker might make away with your crypto.
• Your Public address or wallet address is where people can send you crypto to your wallet. In traditional banking, it is similar to your account number to which people send money.
There are two types of crypto wallets: custodial and noncustodial wallets. Users can choose to store and manage their digital assets in either type of wallet.
A custodial wallet is a type of wallet service where a third-party provider, such as an exchange or a wallet provider, manages the user's private keys and controls the user's assets. On the other hand, a non-custodial wallet is a type of wallet service where the user has complete control over their private keys and is solely responsible for the security of their funds.
Recommended Read: Understanding Crypto Custody Solutions
Crypto wallets will always be a target for fraudsters and hackers since they contain funds but are not as secure as a traditional bank account. These ill-intended parties are always looking for details such as phone numbers and email addresses of people who are interested in cryptocurrencies. They use this information to convince service providers to transfer the victim’s phone number to a device that the criminals own. Once they gain access to the phone number, they can reset the passwords for the cryptocurrency exchanges and steal the victim's cryptocurrency.
However, here are some steps you can take to increase the security of your crypto wallet. There is no perfect way to invest in blockchain-based cryptocurrencies, but following the steps we share in this article can benefit anyone, especially beginners.
The crypto ecosystem went into full swing in 2009 upon the launch of Bitcoin. And within 15 years, the crypto space has seen a massive boom in the number of cryptocurrencies and crypto wallets launched.
Today, thousands of digital asset exchanges offer users digital wallets to store their digital assets. This has made it increasingly challenging to choose which is better to use. However, it is essential to note that when choosing a digital wallet, you should consider going for reputable exchanges that offer secure wallets and are extensive with their security measures.
As mentioned earlier, your private keys are confidential information about your wallet and are reserved only for you. It gives you access to your funds in your crypto wallets, and if it lands in the wrong hands, you might lose all your crypto. As much as you can store your private keys in an online database and back them up in a robust database, another convenient way of storing them is by keeping them offline through cold wallets.
If your private keys or seed phrases are securely kept where you can access them at any time, your crypto is most definitely safe.
Can you imagine what it would be like to lose all your wealth because it was kept in a single place? It’s quite frightening, isn’t it?
Here’s a key rule: avoid keeping all your eggs in one basket. This way, if one of the wallets is hacked, it does not mean that every single one of your assets has been lost. Split and keep your funds in multiple wallets, including hardware wallets, to minimise the chances of losing all your funds.
Acquiring a multi-signature (multi-sig) wallet is advisable to mitigate the risk of losing your digital currency or having it stolen, particularly if you store a large volume of assets. Some crypto wallet providers also have this feature, where more than one signature is needed for a transaction to be approved.
In a multi-sig wallet, it is more challenging for hackers to gain unauthorised access to your wallet and make a transfer without following the right procedures. First, you have to ensure that the current wallet that you are using has this feature if you are using one.
Various crypto exchanges that pay attention to safety offer users the ability to protect their funds with two-factor or multi-factor authentication. By doing this, you can add an extra layer of security to your wallet; this way, it becomes increasingly difficult for scammers to make their way into your wallet and steal your funds.
Your digital wallet is software that runs on the internet. Just like any other software, it needs to be frequently updated so that you can get its new fixes and improved versions. Whenever your wallet providers have a new version of your wallet, update it immediately.
Additionally, by backing up your digital wallet, you are protecting your funds from loss if you ever lose your account or device on which your digital wallet is on.
As a severe safety measure, it is essential to stay away from public WiFi when trying to access your wallet. Recently, public WiFi has become a way for scammers to monitor people's activities online and steal their private information, just like their private keys.
If you have to use public WiFi, it is vital to use a good VPN for your crypto wallets. A good VPN will help encrypt your traffic, making it hard for hackers to steal your private keys.
Using only one password for your private documents and wallets can be dangerous, especially if it is discovered. Hackers can gain access to your password and access your crypto wallet. By refreshing your password regularly and making use of complex passwords, you make your wallet increasingly challenging to hack.
If you need help coming up with password ideas, you can make use of password managers, which help you not only generate powerful passwords but also store these passwords securely.
Cold wallets are offline crypto custody storage, providing high security but less convenience. With cold wallets, your private keys are generated and stored offline. By doing this, it reduces the risk of hacking or phishing. Cold wallets offer enhanced protection, making them ideal for the long-term storage of significant cryptocurrency holdings.
This is how you get to stay updated with the current happenings in the crypto & security space. By staying up to date with the latest news, you can potentially avoid falling victim to various tactics cybercriminals employ to scam their victims of their funds.
The topic of the security risks related to blockchain and crypto wallets is crucial to consider. Phishing attacks, where fake websites are designed to look like the real ones, are very effective because they can easily be mimicked.
It is recommended to cross-check the URLs of the websites you are visiting to avoid any forgery. To improve security, save the addresses of your most popular cryptocurrency web pages to your bookmarks. Services like MetaMask can sometimes come in handy by blacklisting some of the commonly used phishing domains that mimic popular wallets, for example, MyEtherWallet.
You should be very cautious when downloading software, especially cryptocurrency-related ones. Make sure that the source is credible and the software is genuine.
Always ensure that you buy from the original manufacturers only when buying hardware wallets. It is better to avoid resellers as people have lost their entire investments through tampered devices bought from eBay or other similar platforms, where the seller had tampered with the recovery seed to gain access.
You should not rely only on URLs to enforce your security measures. Stay vigilant about the risks associated with Wi-Fi connections and how they may compromise your crypto activities. To prevent DNS attacks, always secure your Wi-Fi network, check for spoofed DNS settings, and avoid redirecting traffic to malicious IP addresses.
To secure your crypto account, use complex passwords, never use the same password for other accounts and use two-factor authentication (2FA). Ensure that your wallet application is updated, and do not use Wi-Fi that is open to the public.
To secure your crypto wallet, you can use hardware wallets (cold storage) and enable features such as multi-signature (multi-sig) wallets. It is recommended that private keys only be stored on air-gapped computers that are not connected to any network.
To secure your crypto wallet, do not store your private keys online, use reliable wallet services, turn on two-factor authentication, change your passwords often, and refrain from making a transaction via public Wi-Fi.
Yes, a crypto wallet can be hacked if the private keys are kept online or if security is poor. Applying a set of security measures may help to minimise risk to a certain extent.
A VPN can give you an added security by ensuring that your connection is encrypted and hence no one can easily hack into your connection and steal your data but this does not shield your wallet directly. It is advisable to apply it together with other security measures.
If the details of your crypto wallet are compromised you will end up losing all the money held in your wallet. It is advisable to act fast and change other linked accounts and report the matter to your wallet provider.
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.
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