Cryptocurrency Security 101: How to Keep Your Cryptocurrency Safe from Hackers

Imagine, one day you wake up and suddenly find that your entire crypto portfolio has been wiped out. How would you feel? It’s a nightmare, I know. Yet, it’s becoming more and more common as cryptocurrency hacks continue to rise.

Source: Chainalysis 

Thus, ensuring cryptocurrency security cannot be considered optional anymore. It’s a necessity for both regular and casual traders. So, let’s break down how you can do it. 

Understanding Cryptocurrency Security: The Fundamentals 

Unlike traditional banking, the blockchain ecosystem is much more secure and stable, thanks to decentralization and encryption. That’s why most security breaches don’t happen on the ecosystem itself – but due to user mistakes, phishing scams, and weak crypto wallet security. 

So, how do you improve it? 

1: The Role of Private Keys 

A private key (long cryptographic code) works like a treasure key to your chest of cryptocurrencies. If you lose it, it’ll be impossible to get access to your funds again. And in case someone steals it, they’ll steal whatever you have kept in your treasure chest. 

That’s why private key safety is the most important aspect of cryptocurrency security. Without it, you have zero control over your hard-earned digital assets. 

2: Cold Wallets Vs. Hot Wallets 

Hot wallets are usually always connected to the internet, which makes it more convenient for quick trading. However, as they stay online all the time, these storages are more vulnerable to hacks, phishing attacks, and malware. 

Cold wallets are offline storage options (such as hardware wallets or paper wallets) and, therefore, can offer excellent security and protection against hacking. Nevertheless, you cannot take out your money whenever you want from these storages. 

3: Two-Factor Authentication 

As a part of your cryptocurrency security, you probably have already kept a password in place. But what happens if a hacker gets a hold of it? As long as you have 2FA enabled in your account, they won’t be able to access your treasury.  

So, how does it work? 

When you’re logging into your wallet or exchange, you’ll need to enter your password first. After that, a unique code (2FA) will be sent to your phone through an authenticator app. This code changes every few seconds, so it’s nearly impossible to reuse stolen credentials. 

4: Using Secure Exchanges 

Exchanges can be quite untrustworthy and prone to fraudulent activities. So, as a part of your cryptocurrency security regime, you must find a platform with the following features – 

• Two-factor authentication 
• SSL encryption 
• Insurance policies to protect against cyberattacks 
• Follows regulations and other legal standards (such as AML and KYC) 
• Has cold storage options and withdrawal whitelists 

Also, don’t forget to go through some online reviews and check if they’re promising secure cryptocurrency transactions or not.  

5: Avoiding Phishing and Social Engineering Attacks 

While hackers mostly focus on using “brute force” to get through your crypto wallet security, scammers use a more subtle plan. They usually create a fake website (which mimics real exchanges) and send emails pretending to be a customer support executive. In some cases, they might also send you messages impersonating someone you may trust. 

Once you click on the provided link, it’ll take you to the replica website and ask you to submit your credentials. If you enter the information they’re looking for, they’ll get access to your account and steal all your cryptocurrencies. 

Here’s how you can stay safe – 

• Always double-check URLs before clicking on them. If possible, enter the actual website address by yourself to access the platform or exchange. 
• Don’t share your seed phrases or private keys with anyone, even if they are a part of your family. No one will ask you for these, ever. 
• Integrate 2FA on your exchange wallet to add another layer of cryptocurrency security. And don’t rush if someone sends you an urgent message on your funds.  

6: Install and Update Security Patches 

If you haven’t made any mistakes setting up your security, hackers will look for vulnerabilities in the software system. If it’s outdated or doesn’t have the newest security patches installed, their job will get much easier. 

Updating your crypto-based software – whether it’s the exchange platform, crypto security app, or your device’s operating system – isn’t only about integrating new features. It’s also about taking care of security loopholes cybercriminals can exploit. 

If you don’t get enough time to manually check for security updates, you can turn on “automatic updates” too. If your device is connected to Wi-Fi, the update will begin right away. Also, don’t forget to update your antivirus and firewall as well. 

7: Backup and Recovery 

Having a backup strategy is a part of private key safety, and here’s how you can work on it – 

• Don’t store your private key or seed phrase in a digital form, especially on your cloud storage. It’s always better to keep them in a metal backup plate or a fireproof safe. 
• Use two backup methods to keep your credentials safe – manual and cloud. Using a multi-signature authorization can make your files even more secure. 
• It’s also important to perform regular verification checks by restoring your wallet’s information on an offline device. This way, you can confirm if you have access to it or not. 

Finally, be as cautious as possible of scams. Don’t share anything with anymore, especially online. Even if you accidentally do it, change your passwords right away. 

The Final Say: Avoid Using Public Wi-Fi 

Risks of Using Public Wi-Fi (Source: Fortinet) 

Public wi-fis are playgrounds for hackers, as they’re wide open and filled with easy targets. So, if you access your account by connecting to them, there’s a high chance that someone is watching over you. The best thing, in this aspect, is to be a little patient and use your crypto exchange after you reach home. Or if you have an important matter to address, using a VPN before using the wi-fi can be a good idea. That way, it’ll be impossible for the hackers to access your IP address and hack your phone.