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7 Useful Tips to Keep Your Crypto Wallet Safe

Basics of Cryptocurrency
Last updated August 26, 2020
Estimated Reading Time:
6 minutes, 46 seconds

The burgeoning crypto market is enjoying a new wave of popularity. The value of cryptocurrencies worldwide has made a tremendous 37% increase from 2019 to 2020. Despite its volatility, the crypto market is growing. Even Bloomberg Intelligence agrees that something would have to go wrong to see a significant downturn in the value of bitcoin in 2020.  While there are several positive forecasts, pundits on the opposite side of the fence predict a loss in value by year-end.

So, what’s the best way to ensure you get the most out of your cryptocurrency investment? Apart from protecting your funds by using a crypto wallet, you also have to make sure your wallet is properly secured. These tips in this article are some best practices you should follow.

5 cryptocurrency security risks to prepare for in 2020

5 cryptocurrency security risks to prepare for in 2020

Though digital currencies are said to be a secure and fast way to transfer funds, there are associated risks to keep in mind. COVID-19 saw an increase in fraudulent activities from hackers, and cryptocurrency users fell victim on quite a few occasions. Hackers posing as legitimate sources of coronavirus information used the opportunity to commit fraud and steal money valued at over a billion dollars at the end of May.

A CipherTrace report revealed that “In the first five months of 2020, crypto thefts, hacks, and frauds totaled $1.36 billion, indicating 2020 could see the greatest total amount stolen in crypto crimes outside of 2019’s $4.5 billion.” The report also indicated that “Coronavirus-inspired fraud is generally executed by luring victims off legitimate platforms into chat rooms where payment in bitcoin can be requested. Additionally, COVID-19 related phishing sites were found to be the most popular COVID-19 related products sold on the dark web.”

Losing some or all of your funds is a real threat, and the danger is that there is no way to recoup that loss. The following are some of the key risks you need to prepare for if you’re a cryptocurrency investor.

1. Hacked trading platforms

If a hacker gains access to a trading platform, there’s a significant risk of crypto users losing their money. In 2018, Coincheck suffered a devastating loss after a successful hacking attempt on its platform, with over $500 million worth of coins stolen. Once hackers infiltrate the platform, they can access users’ keys to withdraw funds and conduct fraudulent trades.  

2. Malware to tricks users

Hackers create new and inventive ways to disguise malware and trick unsuspecting users. One such malware is called a fake tool that advertises on cryptocurrency websites. This is why it is always best to double-check before clicking on links/ ads when visiting sites — even when the website is reputable. Do not download any tool until you are sure it is legitimate.

3. Phishing attempts that clone legitimate websites

One of the ways phishing can steal your credentials is by posing as a genuine trading platform and asking investors to input their login information. Hackers send phishing emails to crypto users containing links that take them to the cloned website.  Again, it’s always good to double-check links before clicking on them and scrutinize URLs to make sure they are spelled correctly before divulging any information.

4. Compromised registration forms

Registration forms on trading platforms are ripe opportunities for hackers to steal information, which they sell on the dark web. It’s hard to detect a hacking attempt in a case like this, and that’s what makes it so dangerous.

5. Social media scams

Cryptocurrency criminals created a social media scam where they hijacked the accounts of famous people and posted messages about a “special giveaway.”  The giveaway was that persons should send cryptocurrency to an address, and in return, they would get double, triple, or more.  Many crypto users were victims of this scam, believing it came from a wealthy and well-known source. Just last month, a Twitter scam saw a total value of $121,000 in bitcoins stolen from users after over 100 high-profile Twitter accounts were compromised.

How to protect your crypto wallet

How to protect your crypto wallet

As the crypto market continues to show growth potential, hackers and thieves are also increasing. They scour the internet for investor’s personal information such as phone and email contact, then use it to convince service providers to transfer the phone number to another device.  Once the number is switched to a device they control, they can access the victim’s cryptocurrency account by resetting the password and ultimately stealing their funds.

Though there’s an inherent risk of losing your money to hackers, you can take the necessary steps to help keep your crypto wallet safe.  There is no perfect solution, but these seven tips and tricks can guide new cryptocurrency investors.

1. Download and use a VPN to login

Consider downloading a VPN app, especially when you are away from home, and need to use public WIFI to access your crypto wallet. A public WIFI does not have robust security features and is an easy target for hackers to collect personal information from individuals who connect to the network. A VPN disguises your real IP address, and as a result, blocks hackers from accessing your location.

 2. Use two-factor authorization

Two-factor authorization (2FA) is an excellent way to protect your crypto wallet. It comes with an added layer of password security. To gain access to your wallet, you can use this 2FA feature by downloading an app like Google Authenticator. You also have the option of receiving notification via text or email with a verification code whenever you are logging in. 

3. Encrypt your wallet

Set up your crypto wallet so that it requires a password to withdraw funds. The password should be unique, containing a combination of letters, numbers, and punctuation marks, making it harder for hackers to figure out. It is highly recommended that you do not use your social media site password for your crypto wallet. It might be hard to remember complicated passwords, and if that’s the case, keep a hard copy in a safe place.

4. Use cold storage

Hardware wallets, also called “cold storage,” allow you to store your digital assets offline. A hardware wallet could be a USB or a hard drive, and the advantage is when your assets are offline, criminals are unable to hack into your account. A good practice is to ensure you encrypt your hardware wallet and also make regular backups.

5. Split up your funds

Can you imagine losing all your funds because you kept them in one place?  Yikes!

A guiding principle is never to keep your eggs in one basket; in that way, if you lose a basket, it doesn’t mean you lose all your eggs. The same goes for your cryptocurrencies — separate and store them in different wallets to minimize the impact of any loss. In general, it is probably a good idea to only have a small amount online for trading purposes, while keeping the bulk of your savings in cold storage.

6. Keep software up to date

Always use the latest version of your crypto wallet software so that security issues are immediately fixed when detected. All other software updates on your phone or computer where you keep your crypto wallet should also be updated regularly, especially antivirus.

7. Download wallet from a reputable provider

Do your due diligence before selecting a crypto wallet because there are quite a few fake cryptocurrency wallets and apps on the market. You should always double-check before installing—even if you’re using reputable stores like the App Store or Google Play. Read reviews and do comprehensive research on the provider to help you make the best-informed decision.

Conclusion

In some way, cryptocurrency is a secure virtual payment method, but it also operates in a volatile market, and there are significant threats associated with storing and trading digital assets. The devastating result of any of these risks is the loss of money you can never recover.

What can you do to mitigate those risks and keep your funds safe? Be proactive. Cybersecurity is a personal responsibility, and the more you learn about the necessary security steps, the more equipped you will be to stave off malicious attempts from hackers.

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