The creation of cryptocurrency revolutionised the finance world. Before its creation, money was limited to fiat currencies and commodities. These assets were handled and stored primarily in the bank.
Before we could use the money or assets we had to make transactions, we needed third-party approval. All of this changed with the creation of cryptocurrencies.
Crypto created a means whereby we do not need to store our money in the 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 discuss how to protect 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.
There are two types of crypto wallets: Custodial and Noncustodial wallets. Custodial and Noncustodial wallets are two types of cryptocurrency wallets that users can choose to store and manage their digital assets.
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, 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.
There is a saying that goes, “You shouldn't keep all your eggs in one basket.” It is mostly applicable for your crypto wallets.
Spreading your digital assets across various safe wallets is also a smart way to protect your funds. For example, if you have five thousand dollars in crypto wallets, you can spread these funds and store them in three separate wallets.
This allows you to have something to fall back on if, eventually, one of your wallets gets compromised.
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 wallets, this way, it becomes increasingly difficult for scammers to make their way into your wallet and steal your funds.
Your digital wallet is a 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 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.
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.