The crypto market is estimated to be worth more than 1,900 billion US dollars by the end of 2028. And if it seems like everyone around you is buying Bitcoin–it might be because they really are.
While hackers actively seek ways to steal our crypto investments, there are still ways to keep them safe with the right security measures in place.
Let’s go over everything you need to know to protect your crypto assets and minimize the risk of a security breach.
How Common Are Cryptocurrency Crimes?
In 2021, criminals stole more than $3.2 billion in cryptocurrency, representing a 516% uptick compared to the previous year.
Put simply, cybercrimes are not only common but are also occurring at a much higher frequency than before.
If you’re a small trader and you hope that cybercriminals only target large investors–I have to disappoint you.
Attacks on the personal wallets of regular people are also on the rise. Taking additional steps to protect your crypto assets from cybercrime is just as important as verifying the legitimacy of the platform you’re using to trade.
Exchange Wallets: Are They a Good Idea?
Before diving any deeper, it’s important to note that crypto wallets don’t hold your actual coins, tokens, and NFTs. Instead, your wallet holds the private keys you need to transfer your assets to another wallet.
Most crypto traders use reliable exchanges like Binance or Coinbase to trade coins and other assets. Many of these individuals hold their keys and crypto assets in these transactional wallets.
But, the problem is that these exchanges are also at risk of being hacked. If the exchange that’s holding your keys gets hacked, you may be one of the ones affected by the breach.
So, even though they are great for trading, opting for exchange wallets as a long-term storage solution is not the best option.
Which Crypto Wallet is the Best?
Crypto and NFT wallets can be divided into two main categories, which are hot and cold wallets:
- A cold wallet refers to a physical device that’s not connected to the internet. This can be a computer without a connection or a special hardware device called a hard wallet. These wallets are referred to as cold because the chances of getting breached are minimal; thus, your assets remain “cold.”
- A hot wallet refers to any internet-capable wallet. This can consist of a physical device or a software wallet that’s connected to the internet. These wallets are known as “hot” because they may be breached, but they also allow for faster transactions and a better overall experience.
It’s hard to say which one is the best because they both serve different goals. If you aim for higher security–go for the cold wallet. On the other hand, if your goal is the simplicity of use then opt for the cold one.
Can Hot Wallets be Hacked?
The short answer is–yes. They can be hacked. However, traders still use them widely because of their simplicity, low cost, and relatively high-security levels.
You can opt for different types of software wallets, each with certain security risks.
Let’s take a look at the options you have available.
#1. Mobile App Wallets
Mobile app wallets let you store your private keys directly on your smartphone. This type of wallet is great for transactions, like paying for goods using cryptocurrencies. But, these keys are stored on your device, so losing your smartphone may mean losing your coins.
#2. Desktop Wallets
Desktop wallets are installed directly on your computer (which can also be a laptop). These wallets give you a lot of control and flexibility, but they can also be hacked remotely by experienced cyber criminals.
#3. Online Wallets
Online wallets are stored on servers controlled by the exchange or service provider.
These are perhaps the most flexible, but they are inherently risky because the wallet provider has access to your keys. Exchange wallets, for instance, are a type of online wallet.
How to Protect my Crypto Wallet?
There are many things you can do to enhance your crypto security system. For instance:
- Use hardware wallets whenever possible;
- Encrypt your connection by using a VPN app;
- Leverage multi-factor authentication;
- Don’t share your private data with others;
- If a deal or opportunity sounds too good to be true, it probably isn’t.
Now, while these are the basics, there are some additional security measures to protect your crypto assets.
Here are 6 steps to help you maintain high-security levels while trading crypto.
1. Learn Everything You Can About New Attacks
One of the reasons why cybercrime keeps growing is that criminals develop new methods on a regular basis.
You need to stay updated with the new types of attacks to effectively protect your assets. If not, you may fall victim to new forms of hacking or social engineering.
2. Avoid Scams Like Phishing
Phishing is one of the oldest forms of cybercrime, yet it’s still used today.
Phishing is when you receive an email or a text message from what looks like a legitimate company, and once you click a link or download the attachment, your system gets infected with malware.
Phishing works extremely well because it can be hard to detect.
Take the time to analyze each message, email, or text you receive, even if you know the sender.
This will help ensure that you only interact with people and providers you know rather than criminals impersonating these individuals.
3. Only Buy Crypto On Reliable Exchanges
The exchange you use to trade crypto is responsible for your assets’ safety. Reliable exchanges invest heavily in a strong security infrastructure, which usually makes them a better choice.
Not only this but working with a reliable exchange will also minimize your chances of losing money due to a platform collapse or similar issues.
4. Backup Seed Words
Seed words, also known as the master key or secret recovery phrase, are a series of terms unique to your account. And yes, anyone with these details can access the account they are connected to.
When you first create an account in an exchange, you are presented with your seed words. Besides keeping these in a safe place and not sharing them, also back them up in a place you won’t lose access to.
The cryptocurrency market is set to grow at an alarming pace over the next few years. However, investors who want to succeed long-term need to develop sound safety practices to minimize their chances of a breach.
By following the steps above, you can position yourself for success and make sure that your assets remain as safe as possible.
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. The writer may or may not hold investments in the companies under discussion
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