Ways to secure cryptocurrencies

07.03.2022
Ways to secure cryptocurrencies

How to secure cryptocurrency

New technologies rapidly change the life of society. The way we work, communicate and settle accounts become different. Residents and organizations are gradually switching to cryptocurrency when buying goods, services, performing various financial transactions. Most purchases are made online using smartphones or other gadgets. Since 2009, a new type of financial settlement has been around, using digital currency. All transactions are recorded in the public blockchain, with free access for everyone. This guarantees 100% security of cryptocurrency in any financial transactions. The process requires a high level of professionalism, but the output is a ledger of transactions that is almost impossible for hackers to crack.

What determines the security of cryptocurrency

Every month we see news about one or another trading platform being hacked because online exchange doesn’t provide the same security level as banks. TO avoid being a victim of criminals, you need to carefully study the ways to fight fraudulent schemes that open access to personal accounts.

Ways to store cryptocurrency

The blockchain protects digital assets from unauthorized intrusions, that’s why purchasing and investing in cryptocurrency is a safe way to get a stable income. Today fraudsters do not attack the system but investors, who purchase virtual coins. There are potential risks for clients of virtual exchanges to know, so they can prevent the loss of their funds.

  • Coins and tokens stored on an exchange are more vulnerable to hackers trying to breach the site.
  • Phishing attacks and fake emails can be used to slip into the original website for a fake one to grab other people’s cryptocurrency.
  • Fraudsters try to fake the owner’s phone number with theirs to bypass 2-factor authentication.

Using cold or hot wallets

Virtual coins or tokens will be safe if you correctly choose the security level. With help of special mobile or desktop apps, any cryptocurrency transactions will be absolutely secure, just fiat assets in banks.

  1. A hot wallet is used by:
  • mobile apps;
  • desktop apps;
  • online services such as Binance or Blockchain.com.
  1. A cold wallet is used by:
  • USB devices with encrypted keys hidden inside;
  • paper wallet.

Most of the clients use hot wallets because they are simple to set up and do not require special skills to work with. By creating an account on an exchange via mobile app or PC, a client automatically gets a hot wallet, that can be used for any cryptocurrency operations. It is a perfect type of storage for cryptocurrencies and daily operations with them. A hot wallet with an internet connection provides access to easy execution of any operations of buying or selling crypto assets. To perform the desired action, you just need to tap a couple of buttons on your smartphone, tablet, or PC.

Important. The ease of use of hot wallets makes them the perfect tool for everyday work. It also makes them vulnerable to hackers. You should not store your core Bitcoin assets on them.

A cold wallet is a perfect tool for long-term investments. As it has no direct internet connection, the risks of unauthorized access are close to zero. Paper with access keys, flash drives, or other physical devices will secure sensitive information, making it inaccessible for hackers.

Use of seed-phrases

The main idea of using crypto assets is full decentralization. Cryptocurrencies are not tied to any Central Bank. Every user gets an account without revealing their identity. No security box is needed to safely store savings. Digital coins are stored on the blockchain. A P2P network distributed all over the world guarantees safe data storage. Although it also has disadvantages. If you lose the key, you won’t be able to contact support and get help, because there isn’t any. Seed phrase, generated by the system from random words provides access to bitcoins. Even if you lose the wallet you still can restore access to the savings.

Use only trusted exchanges

All the client data is stored on exchanges in an encrypted form. Study user reviews before choosing an exchange to buy or sell cryptocurrency. Trust with your coins, if:

  • the platform has an impeccable reputation, and there are no cases of hacking;
  • the period of work is significant since long-term work is the best indicator of a successful fight against hacker attacks or fraudulent schemes;
  • the trading volume is constantly growing, which indicates high popularity and trust among customers.

What technical vulnerabilities can you run into

Despite the rapid development of blockchain technologies, the attempts of attackers to get to digital assets do not stop. Hackers are also improving their methods of unauthorized entry. There are many cybersecurity risks that you need to be aware of. Many large companies are attacked by hackers, any flaw in the security system becomes a loophole for criminals seeking to steal cryptocurrency.

Viruses

Criminals often use virus programs that can copy security-critical information entered from keyboards. Having obtained important data, hackers will have unlimited access to the stored crypto coins. Once any failure in the program is found, or any suspicious activity, unauthorized entry of unauthorized persons, you should immediately take action to protect your savings by changing passwords and access codes.

Hacking wallets or exchanges

Despite the use of the most advanced security technologies, exchanges regularly face attempts of cryptocurrency theft. Fraudsters gain access to personal data and withdraw huge amounts of coins. Statistics show how criminal activity is growing, improving, using the slightest gaps in the security system.

  • BitGrail. Due to the vulnerable segments in servers, $146 million was stolen from the exchange in 2018.
  • KuCoin. The massive hacker attack, which the security system of the crypto-exchange could not prevent, caused losses of more than $ 200 million.
  • MtGOx. The first crypto platform lost $450 million due to security holes, after which it ceased to exist.

The analytics show how important it is to strictly adhere to the maximum precautions for the security of using cryptocurrencies.

For a record. So far, no hacker has succeeded in breaching software wallets. However, by obtaining information about secret phrases, wallet.dat files, or passwords, fraudsters will easily be able to manage customer accounts.

 

Fake apps

The official Google Play store or the App Store regularly faces cryptojacking issues. Modern hackers create malicious programs that, unnoticed by users, are mining blocks, transferring the crypto coins obtained to attackers. There are many cases of attempts to distribute fake applications. Fake software completely copies the design and functionality of the original, which allows fraudsters to receive confidential data to gain full control over the client's wallets.

Fraudulent platforms

Another way to gain access to other people's stocks of cryptocurrencies is to fake crypto exchanges. The main difference between fake services is that they offer maximum functionality at minimum prices. If the fees are several times less than similar offers from other platforms, it is better to double-check before using the services of a suspicious crypto exchange. The way these websites work is simple. Fraudsters wait for a large amount of cryptocurrency to be deposited, after which all the activities of the platform immediately stop. The same awaits users who are seduced by large, instant profits. Such pyramid schemes work like vacuum cleaners, sucking out crypto assets from trusty clients.

Phishing resources

Several hackers team up and create fake platforms to obtain the maximum amount of confidential information. The criminals create replicas of the most well-known, trusted official exchanges such as Binance. Links to phishing resources are distributed via SMS or email campaigns. Without noticing the change, the victims themselves give passwords, names, code words, private electronic keys, and other important information that opens access to crypto coins.

Fake social media accounts

The growing activity in various messengers and services, where people communicate with each other, is a perfect place for hackers to get their hands on personal data. Fraudsters create fake pages for registrations, where they collect all info they need. Often they impose as famous athletes, artists, media persons, or support teams. The main goal of fake pages is to collect as much information as possible about wallet passwords, bank card numbers, addresses. Sometimes they ask to transfer funds to personal accounts for charity or other help.

Human factor

Distraction, absence of mind, inattentiveness have become a reason for various closed wallets to have huge amounts of bitcoin. No one will ever get access to those coins. It doesn’t involve hackers. It’s just a human factor.

Password loss

The number of abandoned cryptocurrency wallets increases every year. The main cause of such problems in most cases is the loss of passwords. Since crypto coins work on the blockchain, and private key files are encrypted using SHA-256 algorithms, password recovery is unlikely. If the user has memorized at least some of the information that opens access to the wallet, then you can use the services of special services that undertake to restore the lost information. However, the cost of assistance will be very high. If there is no seed phrase, and the password is completely lost, nothing will help you to restore access to your crypto assets.

A few tips on the security of personal crypto assets

The expansion of a decentralized system of access to cryptocurrency leads to people facing lots of problems, especially those who fall short of digital technologies. Some countries already allow the use of bitcoin to pay for goods or services, which increases the risk of cryptocurrency theft if you don’t take precautions. By following simple guidelines, it is easy to maintain full control over your crypto wallet.

Use only trusted services

Many companies offering cryptocurrency have an impeccable reputation, supported with long life. If you want to be sure in your asset safety – use only well-known platforms, where breaching risks are minimal. Make sure to check the links you get to follow to this or that resource. If you see any differences, even one character, immediately leave the website.

Store crypto coins on several wallets

Splitting your capital into several parts increases total security and reduces the chance for fraudsters to instantly get all your savings. Besides, it’s best to use several different wallets for storing, exchanging, and investing in the currency. By distributing your assets to different storages, you will keep the most of it if one part is gone. Use hot wallets if you have daily transactions running, but don’t transfer large amounts at once. Cold wallets are not that convenient, but it’s much safer to keep your cryptocurrency there.

Use QR codes to transfer your crypto coins

The use of tokens or virtual coins for mutual settlements requires the transfer of details, which leaves loopholes for hackers to penetrate. The full address is hard to remember because it consists of 27-34 characters. You can only make a transaction by providing this long set of characters to the counterparty. You can reduce the likelihood of errors or access to confidential data by unauthorized persons by using QR codes. Just hold the smartphone screen near the reader, and the payment, purchase, or transfer will take place automatically.

Use two-factor authentication

An additional layer of security is 2FA. It checks who is trying to access the account each time any transaction is made. At the first stage, the owner must enter a name and password in the appropriate field. After that, the owner receives a unique set of numbers, letters, designations, randomly selected by a special program, by e-mail or notification. Currently, the most popular 2FA application on most marketplaces is Google Authenticator. The service automatically generates passwords for authorization using a special algorithm and transfers them to the owners every time they visit the account. This may seem somewhat unmanageable, but it increases security.

Use only strong passwords

When you create a combination of characters, use random digits, signs, that have no connection to your data. Use both letter cases when typing characters. This will be a great measure of protection from fraudsters trying to get to your funds. Don’t use one password for several resources, you’re using it for transactions, buying/selling, or investing in crypto coins.

Perform all actions with crypto assets only at decentralized exchanges

Here, all participants conduct digital asset exchanges without directly involving intermediaries. The main advantage is that all the tokens for the transaction are in the owner’s wallet until the last moment. This is possible thanks to smart contracts. On the DEX exchange, complete confidentiality is achieved because there’s no need to confirm your identity for each transaction. The main disadvantage is the impossibility of

Don’t use public Wi-Fi to exchange cryptocurrency

Many modern smartphones can automatically connect to public Wi-Fi hotspots. It is better to disable this feature so that attackers cannot steal your data or install malware on your device and transfer all important information to third parties. When leaving work or home, do not forget to turn off the search for available Wi-Fi. Do not use other people's or public Internet connections to transfer confidential information.

Check the search bar before visiting the website

Before you go to an unknown site, be sure to check its full address. This is especially important if the link was received from a suspicious source. You can confirm the authenticity and reliability of the channel using an SSL certificate. When it expires or is not present on the website at all, the browser will notify users, while blocking the transition to suspicious links.

Be careful about free crypto airdrops

Most often, AirDrop is used by large companies or startups to popularize their resources. These can be large exchanges entering a new market, trading platforms, or services. To get free virtual coins, you need to complete a simple task.

  • Share one or several posts on your social media accounts
  • Register at the new platform
  • Make several insignificant transfers via the new platform

 

However, you should carefully study the airdrop offer to avoid fraudulent schemes aiming to get your confidential information. If the promo initiator is an unknown organization, and they ask to transfer significant funds to them, most likely these are scammers.

The expansion of NFT influence to Smart TVs
With the further spreading of crypto activity, no wonder that nowadays it can be regulated on more and more devices. First with standard PCs, then mobile devices, and nowadays even TVs can...
Furthermore plans of Estonia concerning crypto activity
One of the countries which is not really fond of perspectives given by crypto environment is Estonia. The rules presented by government are rather strict, presenting the decisions on the brink of...