Investing in cryptocurrencies is risky, a problem that keeps many prospective cryptonauts away from the market. In this case, we are not talking about price fluctuations that can render a digital token worthless in a heartbeat. Instead, we mean the ability to secure your digital assets and keep your cryptocurrency wallets safe. Unfortunately, there are no cryptocurrency banks, so the responsibility belongs to the owner alone. Also, there are no regulations, insurance, and other protections typical of the traditional financial system. So if you get hacked, there’s little you can do about it.
So if your Bitcoin or Ether, or any other cryptocurrency is stolen or lost, getting it back is exceedingly tricky. Your digital assets need protection, and only you can do it.
Granted, online transactions are risky. But you can do plenty to minimize the risks and remain safe. Those safety practices will also help you keep your digital currencies safe.
If you’re going to get serious about cryptocurrencies, you’ll need a digital wallet to keep your assets offline and secure. That is not so different from keeping your traditional bank account safe. However, there are differences, as you probably expected already.
It all starts with a private encryption key that you must keep safe. It is the first step in owning a crypto wallet. So how do you keep that key safe? This article will tell you.
Do crypto wallets get hacked very frequently?
Cryptocurrency is becoming increasingly more popular. And the threats to crypto owners are also growing and evolving to suit the new times. The more people get involved in the cryptoverse, the more sense it makes for hackers to devise attacks.
Over the last decade, crypto exchanges have drained about three billion USD from their accounts. Since the Covid-19 pandemic started, the cryptosystem has faced about twelve attacks. The losses have been around five hundred million USD. So it’s plain to see that the latest attacks are also the juiciest.
Hackers know many ways to steal digital assets. They go from the personal attack (guessing or stealing a password) to the institutional (attacking an exchange platform).
However, stealing private encryption keys remains the most common attack, which is why keeping that key safe is essential.
The prevailing maxim in digital security is: that nothing can ever be 100% safe. However, there’s plenty for you to do so that your security level gets asymptotically close to 100, even if you never reach it. And you’re about to learn about them.
How to secure your digital wallet and assets
So we all agree on the need to keep crypto wallets safe, right? Good. So is your wallet secure as you read this? Please read on to find our top ten tips to keep your wallet protected. It’s unlikely that all ten tips will be relevant for every user. But they will still tell you how close you are to the best security level you can achieve and what things you need to change to improve.
Of course, there are different levels of security and risk. So you’ll need to decide how much practicality you could sacrifice to keep safe. Keep also in mind that the crypto-verse has been sneaking its way into mobile phones, so you need to mind your phone’s security as much as your computer’s or your physical, digital wallet.
1. Use a cold wallet to store your cryptocurrencies
The first thing to do is to get a hardware wallet that will be offline most of the time –that’s what “cold” means. It would be best if you never had more coins online than needed to perform your transactions. All other tokens must remain offline, where no hacker can access them.
Cold cryptocurrency wallets look like USB thumb drives. They hold the private key you can use to access your assets. You can set up your key if you want, but if you lose it, you’ll also lose the ability to use your funds.
A recent report tells about two investors who lost the key to their hardware wallet. They grew desperate as the value of their stored, but unavailable coins exploded. So they tried a radical solution, hiring a hardware hacker who cracked the key successfully. Once the hacker solved the problem, the investors could extract their digital assets worth about two million USD.
We understand that you might not be overly happy to hire a hacker if an encryption key gets lost. But, thankfully, you don’t need it either. You’ll always have access to your virtual funds if you store your private key safely.
Never share your private key. Instead, keep it somewhere physically safe, like a safety box or a safe.