Many people start out trading their cryptocurrencies through 3rd party wallets or services, but there are crypto wallet security risks involved when keeping them locked up in these accounts.
With its increased popularity comes increased interest from criminals who want to use scams or other illegal means to get their hands on some of those digital coins. Reports show that cryptocurrency thefts have become more frequent, and many companies are now struggling with how to keep their currency secure.
Cybercriminals have figured out it’s not just about stealing but about making a profit too.
Crypto crime is at an all-time high. That’s why it’s important to look into the past and learn from previous mistakes and come up with solutions that might bring us a step closer to finding a permanent solution to malicious emails, investment scams, malware, or brute force digital asset private key, etc. All we need is a change in perspective that deter crypto crimes – leading to the reduction of crypto crime and saving investors a lot of money
Crypto Wallet Security
These cyber-thieves have become so creative that now instead of hiring individual hackers for projects or consulting agencies for help, many have opted for the new teamwork structure known as hacktoriums which allow groups of talented people with unique sets of skills to come up with a solution that is much more thorough than before.
To combat this new threat, digital currency owners need to ensure that cryptocurrency transactions are handled in an extremely secure environment to avoid the theft of assets during transfers from one crypto account to another.
The latest FTC report shows that fraud and scams related to cryptocurrency have increased 312% per year on average since 2016.
Add smooth crypto transactions via digital wallets on mobile; keeping sensitive user information secure in a crypto wallet app becomes more critical.
Platform trust issues of mobile crypto wallets
Talking about different types of crypto wallets, there are 3 key types: web, mobile, and desktop. Much like the wallets in your physical pocket, different cryptocurrency wallets have vulnerabilities for cybercriminals to exploit.
For example, mobile digital wallets that are most popular for accessing personal crypto wallets online have security weaknesses.
Also, crypto wallets often do not verify if the device is secure (rooted or jailbroken) and safe from all of the potential threats (like some malicious app or reverse-engineering possibility) out there.
Now and then, we read how malware like Pegasus or other malicious software is gaining access to sensitive information by stealing a user’s private key or credentials through phishing. Often, this kind of attack can be carried out on users who are tricked into installing Trojan horse apps masquerading as legitimate programs.
How to secure your Crypto Wallets
In this section, let’s talk about ways in which one can keep their crypto assets safe and secure so that you are better protected from scammers who might cheat you out of your assets or hackers who break into your system to steal your funds.
Use a Cold Wallet
Many people have heard about “cold wallets” when it comes to blockchain transactions that are encrypted and plugged in but aren’t connected to the internet, so there’s a lesser danger of a cyberattack, like in the case of hot wallets.
A paper wallet (as the name suggests) is just a piece of paper that has both private and public keys. These are often distributed through physical advertisements or cryptocurrency websites and can be accessed using scanners (to copy the code electronically).
Avoid Public Wi-Fi
Whenever you’re online, make sure your connection with the internet is secure, and if at all possible, avoid public Wi-Fi connections whenever possible. Also suggested is using a VPN (that creates a secure ‘tunnel’) that hides your IP address and prevents DNS leaks.
With this camouflage, no one knows where you are. This protects you from online threats and hackers, allowing you to access region-locked content.
Diversify Your Investment
A cryptocurrency wallet is like a drawer. As an investor buying into bitcoins, you need a place where you can keep your digital currency. A cryptocurrency wallet is the same thing as a physical wallet – it holds all of your hard-earned money in a convenient, tiny container to use whenever and wherever you want to buy something.
As we know that risks in crypto are many, the best method of keeping track of your portfolio is to learn what various cryptocurrency wallet security can do for you and your investment strategy.
Staying in charge of your cryptocurrency wallet serves two purposes. First and foremost, having multiple wallets leads to greater security by segregating sensitive data into separate locations (s). Second, it’s a great way to prevent losing funds if your digital wallet becomes compromised.
For a crypto wallet, inherent security flaws, like SIM swapping and spoofing, etc., make them poor options for safeguarding digital assets.
Suppose you are thinking about investing in some cryptocurrencies like bitcoins. In that case, you will want to do so through a cryptocurrency exchange that offers two-factor authentication to ensure your money is safe.
Multi-factor authentication (also referred to as MFA or 2-factor authentication sometimes abbreviated as 2FA) is the safest way to secure your password.
The authentication is an access-control mechanism that requires two different methods of identification or authentication:
the first being something you know (such as a PIN), and
- the second is something you have (like your phone, which sends a text message to verify it’s you).
Be Careful About Wallet Service Security
While most cryptocurrency exchange platforms and online wallet services have proven legitimate and secure, you should still practice caution when using any service that stores money for you or offers to store your currency. You need to know if a crypto exchange or an online wallet contact has the proper security measures to protect people from the theft of their digital currency.
Striking a balance of large and small sums of cryptocurrency in different wallets is wise.
Don’t keep all your eggs in one basket. That’s a lesson that you might remember from your childhood, and it’s a lesson that holds them just as much as it does when it comes to protecting your digital currency. It is suggested that you don’t keep all your Bitcoins in one place, or that could leave your crypto investment vulnerable.
Keep Backup Handy
Cryptocurrency stored in a digital wallet is not insured by any governmental agency in case of loss or theft. Users are responsible for protecting their private keys, which law enforcement has no recovery method.
So, it is important to keep backups of your primary wallet’s private key, which proves that you own and can access that particular digital currency account.
Crypto wallet security is a bit like a maze. It has several weak spots, and many things can go wrong when you’re trying to tackle the issues.
Two key concerns are critical when it comes to wallet security. The first common reason people lose their cryptocurrency wallets is by losing access to their local storage when malware finds its way to the wallet.
The second crypto wallet security threat is a lack of authentication. This is because sometimes viruses and other malicious software can do whether or not financial data on a particular computer is being accessed at that time, especially via an unsecure mobile device.
Because of a lack of correct input, users could accidentally change permission/granting of functions when working with this crypto wallet software.
FAQs related to crypto wallet security
What are crypto wallets?
Digital currencies can be stored in a ‘Crypto wallet’ app accessed via a ‘private key’ – the crypto version of a super-secure password. Without them, the owner cannot access the currency.
What happens if Crypto security is breached?
If a hacker gets ahold of your digital wallet’s private key information, the blockchain won’t pinpoint them, and the perpetrators will be able to take all the crypto investments.
What should an ideal Crypto Wallet security look like?
Cryptocurrency is associated with many dangers, a major one being the ease of losing a private key. One way to make sure that your cryptocurrency is kept safe and secure is to use an offline wallet that should be accessible through a desktop, mobile, or any custom method. Add multiple levels of authentication, and you are already a ‘crypto wallet best-practice user.