Tips on Safeguarding your Cryptocurrency Wallets
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The cryptocurrency market today is worth about $350 billion. A small chunk of that eye-popping amount would mean financial security for any individual. Because of cryptocurrency’s promising future, several investors have gone on to buy and hold digital currencies, margin trade crypto perpetual futures, and engage in arbitrage trading.
However, although many use bitcoin for financial privacy, it is not without its security risks. Hackers seek to lay their hands on significant amounts of cryptocurrency by illegal means. They’re called cryptocurrency hackers, and they use different techniques to take your money. In 2018, at least close to $2,000 was stolen by hackers each minute. These statistics show that you need to heighten your security level for your cyber currency funds.
How Hackers Steal your Crypto Funds
Compromising Digital Currency Exchanges
Because cryptocurrency is highly liquid and difficult to trace to a person, hackers focus a lot on it. To gain a large amount of money for their efforts, they target cryptocurrency exchanges. These exchanges store funds from several users, running into thousands and millions of people.
Since exchanges have to be readily available for users, their wallets are always connected to the internet. This poses several risks because the wallets would remain susceptible to cyber threats. A single attack on a crypto exchange you use could spell a loss of your entire portfolio.
Breaching your Computer
Hackers typically use malware and ransomware to attack computers. Malware can potentially transmit information on your computer to a hacker. Ransomware locks you out from accessing any of your files.
Imagine a situation where your private key is stored on your computer, and a hacker successfully forces malware onto the system. Your private key, which is the only code needed to access your funds, would be leaked and your funds stolen.
- Social Engineering
Numerous social engineering attacks hit crypto investors. Some of these attacks include spear-phishing or phishing. Phishing is arbitrary, with the hacker hoping to get lucky in the quest for cash. Spear phishing, on the other hand, targets specific individuals with substantial amounts of crypto funds.
Both forms of phishing involve the creation of a phony website to steal crypto details. Phishing attacks are majorly perpetrated through emails.
Sending ransomware as an email attachment is also a form of social engineering. In most cases, these victims are singled out after intensive tracking by hackers.
Shielding your Digital Currency Portfolio from Cybercriminals
Purchase a Hardware Wallet
If you do not actively trade cryptocurrency and you’re a long-term investor, you should consider using a hardware wallet. Hardware wallets ensure that your private keys remain secure and only known to you.
Hardware wallets also use highly encrypted codes that secure wallet access. If your hardware wallet is stolen or lost and another person tries to access the wallet, your PIN code would protect you by destroying the device. Your funds would not be harmed in any form.
Hardware wallets are also impervious to most forms of cyber-attack.
Use a Multi-signature Address
A multi-signature address is one that requires multiple signatures to open a wallet. This way, if your private key gets stolen, the hacker would be unable to get into your wallet without the other private key.
Many crypto wallets use single key addresses, which compromise the account in the case of a hack. A multi-signature wallet improves on that since multiple keys can be held by different employees to prevent theft.
A lot of big firms that engage in cryptocurrency trading also use multi-signature addresses because it facilitates democracy. Before funds can be transferred, a predetermined amount of keys in the network will need to approve the transaction.
Use a VPN
A significant percentage of the first cryptocurrency investors bought bitcoin because of the privacy it offers. A VPN enhances that privacy by creating a tunnel between a user’s computer and the network the user is connected to. This way, the flow of information remains unseen by third parties.
VPNs change IP addresses and prevent hackers from tracking your activities and payments.It also shields you from being targeted by cybercriminals through spear phishing and ransomware online.
Beware of Phishing and Ransomware
Be cautious whenever you receive an email with a link. Before you open any email, make sure that you can identify the sender. Also, check the domain name of the sender’s email address to verify the mail from the exchange.
Look particularly for spelling mistakes. A single mistake in the domain name would mean you’re being phished. Stop downloading attachments from unverifiable sources too.
Install an Antivirus
Antivirus software is designed to repel and detect malware that is on your computer. They’ll prevent malware from getting onto your device to send information to a hacker. Ensure that you update your antivirus software immediately one is available.