How to Safeguard Your Cryptocurrency?

The crypto market is similar to the stock market, where assets are bought, sold, and traded through specific exchanges. However, the rise in crypto’s popularity led to the entry of various platforms. There is a high risk of losing cryptocurrency if investors trade on an exchange with fewer security controls or dubious/shady background.

Thus, we recommend using regulated and approved crypto exchanges for trading. Platforms like Binance, Kraken, Crypto.com, Coinbase, and Gemini are considered some of the safest exchanges in the crypto market. These exchanges were transparent when they suffered breaches, and took adequate measures to increase their security infrastructure. The companies also have dedicated facilities for remote crypto storage in different locations.

All crypto transactions occur through user accounts on the exchange. Thus, if a hacker can access a trader’s account, they can withdraw all their funds and take ownership of the wallet. This is one of the easiest methods to steal cryptocurrency.

A trader can prevent this by setting up another security layer through two-factor authentication (2FA) for all withdrawals from the account. When 2FA is enabled, the trader has to enter an additional code sent to their phone number to complete the withdrawal. Thus, we recommend traders choose a crypto exchange that offers a 2FA security feature.

Cryptocurrency can be stored in two types of wallets – hot (online or software wallet)) and cold (offline or hardware wallet). A hardware wallet is a physical device that stores private keys. A trader has to connect (wired or wireless) the wallet to their computer to perform a transaction. The cold wallet is further protected by a PIN that prevents others from opening it.

Hot wallets are always connected to the internet, making it easy for hackers to compromise their accounts, and withdraw funds. Cold wallets are not connected to an online source or cannot be accessed through malware attacks. Though hardware wallets are expensive, they are highly secure and offer almost zero possibility of a breach. If the cold wallet is stolen, transfer the funds right away to another crypto address. However, stolen wallets are rarely compromised.

Buy cold wallets from reputed manufacturers and beware of fake software updates. Hackers can steal crypto funds by sending a fake software alert to the cold wallet. Trezor Model T, Ledger Nano X, Nano S, and ELLIPAL Titan Mini are among the leading cold wallets used by crypto traders.

Authenticator apps like Google Authenticator work similarly to two-factor authentication. The difference is that the app belongs to a trusted third party and doesn’t require SMS messaging to send the code. The hacker has to gain access to the wallet owner’s phone to know the code if they use the authenticator app.

It is more secure than 2FA as some hackers can bypass SMS security (or transfer the phone services to their number) to access the account. This isn’t possible with an authenticator app. Another advantage is that the crypto funds will be secure even if the exchange itself is attacked by cybercriminals.

Seed words are the master key or secret recovery phase code used to recover an account, and crypto funds, if the hardware wallet crashes. When a trader uses the cold wallet for the first time, they will be prompted to back up the seed words. It might seem unnecessary, but is a crucial step to add one more layer of security to protect the crypto funds.

Write down the seed words and save a physical copy somewhere safe. Some manufacturers offer special material to back up seed words. Use it to ensure that the code cannot be erased or torn by mistake. Keep this in a safe, or somewhere it is not accessible to others. Don’t ever take a screenshot of the seed words, as hackers can get a copy of the screenshot, which makes it the easiest way to hand over crypto funds to hackers.

Crypto wallets are also available as browser extensions. These are hot/warm wallets that don’t have a physical presence. A trader has to enter the password every time they access the wallet to transfer funds. However, the wallet/website will not ask for seed words. Enter the seed words only the first time when installing the browser wallet.

If the wallet randomly asks for seed words, close the window immediately. It is a fake site created by hackers to gather information. Clear the cache to wipe away the traces of the malicious website. Then, uninstall and reinstall the browser wallet. A trader can also message customer support to inform them about a possible breach.

Cracking passwords is a daily job for hackers. A trader can make it difficult by creating a complex password that can be difficult to decode, even with software. A combination of upper case, lower case, numbers, and special symbols works best. Change the password regularly to stay one step ahead of cybercriminals. A trader can also use a reliable password manager app to save all the passwords in a single place. It is advisable to have a strong and complicated master password to keep the accounts safe.

But what if a user still forgets the password? The user can leverage the seed words to access their account, uninstall the wallet, reinstall it, and set another complex password.

The wallet password or PIN has to be different and unique from all other passwords that the user has created. It’s risky to use the same old password from the younger days for all the social media, banking, and crypto accounts. If a hacker gains access to one of the accounts of a user, it won’t take long to break into the crypto wallet and ‘withdraw’ the funds.

Hackers install malware (like Redline Stealer) on computers to track user activity and passwords. Since the browser wallet passwords are stored in plain text, they are easy to decode. A complex password can reduce the risk, though hackers can still get the data from the computer’s RAM.

Traders and investors shouldn’t leave their crypto funds in the account on the exchange. Exchanges are a prime target as they have millions and billions of cryptocurrencies in one place. Thus, traders and investors must withdraw the amount and store it in a hardware wallet. Thus, even if the exchange is hacked, the funds will remain safe. The funds can be used by connecting the wallet to another exchange or account.

As we never know when a crypto exchange will be attacked, it is good to make this a regular practice. Leave the minimum required funds in the account, and transfer the rest to a software or hardware wallet that is not automatically linked with the exchange.

Scammers send links to download eWallets on the computers and move the crypto to a safe place. They create fake websites and applications resembling popular wallets like MetaMask, Ethereum wallet, etc. If traders don’t pay attention, they will end up handing over the crypto funds to the hacker.

The simplest method to avoid such scams is to download the eWallet only from the official website, as opposed to using forwarded links. Moreover, we suggest avoiding clicking on ads posted on social media.

Similar to fake eWallets, cybercriminals create web apps that closely resemble crypto trading apps and exchanges. When traders use such an app, their accounts and wallet are compromised. Thus, hackers can steal funds with ease.

Traders can avoid this by double-checking the URL of the site. Don’t search for the website on Google. Bookmark the link to the original site. Developers can also check the code of Dapps if they can read the corresponding programming language. Trusted websites have a lock icon on the left side of the URL in the browser, which denotes the presence of an SSL license. Finally, the trader must check the contract address if they get a notification to ‘approve’ dApp to use the tokens for a transaction.

Email scams and phishing attacks continue to be a favorite method for hackers to target innocent users. The banner, domain, name, and just about everything in the email could be real, but the sender will be a scammer. Downloading the attachment results in installing malware on the computer. This allows hackers to track user activities and learn all the passwords. If the user’s crypto funds are stored on the exchange in a browser wallet, it becomes a simple task to steal the investment.

The safest way to avoid malware attacks is to use different devices for browsing and crypto trading. A trader doesn’t need to buy another smartphone or computer for this. Instead, they can simply log out of all accounts on one device and format it. Then, use it only for crypto transactions and disconnect the internet network when the device is not in use. However, it is still important to look up the sender’s email address and be careful before downloading attachments.

It’s easy for a trader to use public Wi-Fi to check their crypto account or make a transaction. But it is an unwanted risk to take with crypto funds. Hackers keep an eye on the internet traffic using tools like Wireshark. They pay special attention to devices that access banking and crypto websites using public Wi-Fi. While they may not immediately steal the funds, they do get one step closer by identifying and tracing the online activity.

Thus, a trader must use their mobile data to open a crypto app on a mobile phone. Also, make sure strangers can’t peep into the phone. For traders who carry passwords on paper, make it a point never to perform crypto transactions in public places.

Securing an internet connection can go a long way in minimizing the risk of cyber attacks. For traders who conduct their crypto trading activities from home, it’s important to establish a secure infrastructure. The trader must check the firewalls of their computer and internet network. Upgrade the antivirus software and ensure it is constantly running in the background.

If using a wireless router for the internet, change the default password and set a new one. Enable network encryption to add another layer of security. Disable the router from broadcasting the network name. A trader needs to follow these precautions when setting up the router.

Despite taking multiple security measures, traders might still be attacked by hackers when in the middle of a crypto transaction. It is called a MITM (man-in-the-middle) attack, where the hacker breaks the connection between the trader’s device and website to add their device as a middleman. All the information will be routed through the hacker’s device, thus allowing them to monitor every move.

To prevent such attacks, traders must use VPN (virtual private network) services for crypto trading. VPN will mask the original IP address, and use a fake one to help navigate the internet. Leading VPN service providers like NordVPN, ExpressVPN, and Surfshark offer additional features that further enhance the security of the network.

Be it a computer, laptop, or smartphone, turn on device updates to use the latest version of the software. This ensures that the device and the apps are up to date. Use antivirus software and regularly scan the device to detect and remove traces of malware. Even hardware wallets run on software. Run updates through the official mobile app or by connecting the wallet to the computer.

Scammers target newbies and crypto enthusiasts with limited knowledge of the market. Since crypto transactions are irreversible, it is easy for them to loot funds and remain anonymous. The strength of blockchain is also its weakness. However, novices can protect themselves from scammers by being aware of how they operate.

If a novice is contacted by a person offering ‘risk-free’ rewards, ‘highest returns in a short time,’ or other such claims, it’s possible that they are running a scam. The crypto project should have a detailed and well-written whitepaper mentioning the names and experiences of team members. Tokenomics must be displayed on the website.

Still, we advise novices to ask around, especially before investing in a new crypto company. Follow crypto news platforms and experts to get the latest updates about the developments and scams in the crypto industry.

It’s exciting to share the crypto journey with others but refrain from doing so on social media. Many traders take advantage of anonymity on blockchain platforms to keep their identities secure. They don’t talk about their crypto investments or earnings. Since the crypto industry is not yet regulated, a trader will be at high risk if they make their details public. Hackers closely follow such users and attack their accounts. Finally, don’t ever reveal where the passwords are saved, for crypto accounts and wallets.