How to secure cryptocurrencies from hackers?
Cryptocurrencies have made thousands of investors rich overnight. While these digital coins may not be as shiny as gold and silver, they are just as tempting to online criminals. However, some investors remain ignorant on how to protect their digital assets. Here are a few tips on securing your crypto holdings.
Crypto Exchanges’ Wallet Might Not Be A Good Idea
Every cryptocurrency exchange has a built-in wallet. These are put in place for the ultimate ease of use experience for their clients. Clients who wish to take a look at all their digital assets will find them all conveniently displayed in one page. As a result, conversion or trading is made relatively easy as well.
However, most cryptocurrency experts do not recommend that investors use these wallets provided by exchanges. The common concern is that there might be potential security issues with these wallets.
Leaving your cryptocurrencies inside an exchange’s wallet, also known as “custodial” wallets is a risky move, according to Cnet. The simple reason for this cautious stance is that anything being kept online is vulnerable to hacking. And, with the rising value of cryptocurrencies, these wallets are particularly juicy targets for cybercriminals, who will spare no effort in cracking the codes to get their hands on these online fortunes.
For example, Tokyo-based lost 750,000 bitcoins belonging to its clients in 2014 according to Cnet. Another high-profile crypto-related cybercrime was 2017’s hack on NiceHash, which resulted in a loss worth $60 million.
But perhaps the biggest reminder of the dangers in keeping your digital assets in your exchange’s wallet is Coincheck’s hack in January 2018. Known as the biggest cryptocurrency heist, thousands of Coincheck customers lost their digital coins, collectively valued at $534 million. While the exchange later reimbursed affected clients, it is still an undeniable example that security measures on wallets provided by exchanges can be breached.
Maintain Control Of Your Wallets’ Keys
If you don’t maintain control over the keys to your digital wallets, you don’t really control your crypto holding. In the case of wallets provided by crypto exchanges and online wallets, you are handing over your control to these parties.
Your best option is to store your crypto holdings in wallets that let you control their keys or any client-side wallet, according to Steemit. For additional security, you can encrypt your wallet with a unique passphrase that will leave potential hackers guessing for a long time.
Use Hardware Wallet or Cold Storage
Meanwhile, it might be better if you opt for a cold storage or hardware wallet to store your digital fortune. This is the perfect solution for investors who view their cryptocurrency holdings as long-term investments as well as those who don’t need to trade in the market on a daily basis.
A cold storage setup could be a computer dedicated to storing your digital coins and one that is disconnected from the net. A handier version is a USB drive specialized for currency storage which is more commonly known as hardware wallet. While you will definitely need to spend for these types of storage, the expense is minuscule compared to the worth of the digital assets they protect, and they are certainly worth their price.
There are three types of software wallets. They can be desktop wallets, which are installed on your PCs, online wallets, which are hosted by a website and is super convenient, or mobile app wallets which are also convenient but has that added risk if you lose your mobile phone.
Regardless of which type of wallet you choose, you need to remember that anything connected to the net has a certain degree of vulnerability either through viruses, malware or remote takeover. It is, therefore, necessary to take some security measure on your part such as encrypting your wallet, making multiple backups, multisignature security and writing down the mnemonic seed of your wallet which could come in handy in times of hardware failure.
If you still want to learn more on how to secure your cryptocurrencies, there are a lot of other ways that you can follow to achieve it. Just always make sure that the information you are receiving are legitimate.