Cryptocurrency holders need to safeguard their digital assets, given the rising cases of hacks and scams that have resulted in the theft of at least $19 billion worth of coins in the past 10 years. With ever-rising threats of targeted and random cyberattacks, crypto owners need to use best practices to limit security loopholes and exposures to such hazards.
The key to these best practices is users’ choice of storing their digital assets. Choosing a reputable institution that offers secure and reliable crypto services is a safe place to start. Crypto holders also need to select a preferred wallet type that will fit their preferences for trading, storing and transferring assets. Each wallet is secured by a private key – equivalent to a PIN – that the holder can use to access funds stored in their wallet. The underlying decentralized ledger technology on blockchains makes it nearly impossible to recover lost crypto in case of a hack or loss of private key.
Risks Associated with Cryptocurrencies
With a boom in cryptocurrency interest over the past years, scammers have taken notice of new opportunities for illicit activity. The high-tech nature of crypto attracts sophisticated scammers and threat actors aiming to defraud crypto holders.
The framework that supports the entire crypto industry operates online. Therefore, crypto assets are constantly exposed to these threats than ever before, as more threat actors look to exploit vulnerabilities in online environments.
Deploying cybersecurity best practices help alleviate much of the threats posed to securing crypto assets. However, cyber threats always evolve, demanding a proactive response in protecting digital frameworks against attacks. There are multiple layers of security for a crypto wallet, and all these layers are susceptible to vulnerabilities and exposures. Here are some common ways that hackers execute attacks:
Cryptocurrency Exchange Hacking
Cryptocurrency exchange platforms are consistently targeted by cyber attackers. Most of the exchanges targeted are centralized. These centralized exchanges are desirable for such attacks as hackers have a single point to find and exploit exposures and vulnerabilities. Exchanges and customers often suffer huge losses. In one recent case, Singapore-based exchange, Crypto.com, announced that there were unauthorized activities in some users’ accounts leading to a loss of nearly $35 million.
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From social media scams, initial coin offering (ICO) frauds, and even other social engineering scams, the crypto industry is full of them! Social media platforms are especially favorite for threat actors, who deploy bots to make comments and replies to posts on YouTube, Twitter, and other media. These hackers spam comment sections on posts from verified accounts, posting fake giveaways, promoting fake ICOs, or too-good-to-be-true deals like promising to double their crypto when they deposit to the hackers’ wallets.
Another method deployed by threat actors is through phishing. In this type of fraud, the attacker lures the victim using manipulation or deceit to offer sensitive personal information and login credentials. Such phishing attempts can be random or targeted. Successful phishing attempts could let attackers access your crypto wallet and steal your funds.
How to Safely Set Up a Crypto Wallet?
There are different types of crypto wallets, each offering a unique feature that holders may prefer over the others. These wallets include hosted or custodial wallets, non-custodial wallets, and hardware or cold wallets. Your choice of wallet largely depends on what you want to do with your crypto the level of safety net you want to have, among other preferences.
To get started investing in cryptocurrencies, you need to get a crypto wallet. These wallets store one’s private keys to ensure your crypto is safe and accessible. Also, with a wallet, you can simply buy, sell, transfer, or spend digital currencies in your wallet.
Critical Features of a Crypto Wallet
A cryptocurrency wallet is a safe place where users can store their digital assets and funds. It serves as a way the holder receives, keeps, and spends their coins easily while maintaining complete control of their crypto holdings.
Below are key features that should be integrated into a crypto wallet:
- Multi-signature (Multi-sig) support – Multi-signature wallets are crypto wallets that require two or more private keys to approve a transaction. These wallets minimize the risk of failing to recover digital assets from a sole signatory to a wallet.
- Biometric authentication – Wallets that support biometric authentication like fingerprint access are an additional layer of security as access to the wallet is only possible by the wallet owner.
- Multifactor authentication (MFA) – Wallets with MFA help to secure the wallet even more as login and access to the wallet have to be verified in multiple methods.
- Mnemonic passphrase – Wallets that generate mnemonic passphrases ensure simple backup and recovery of crypto wallets if one loses or damages their device.
- Optimal session logout – Since crypto wallets handle highly-sensitive information, wallets that connect to the internet should deploy optimal session timeouts to protect users from risks that arise with staying logged in for too long. For instance, automated session logouts after a transaction may prevent unauthorized access.
- Password-protected access – Wallets must include passwords for access to wallets, in addition to other secure login features
- Low fees – Wallets that offer affordable rates for processing transactions are preferred
- A real-time tracking facility for payments
- Real-time push notifications to view the wallet activity
- Little-to-no influence by government regulations
- Quick conversion from fiat to cryptocurrency and vice-versa
- Multiple modes of executing a transaction via NFC, QR codes, or a Bitcoin URL
Keeping your Crypto Assets Safe
Want to secure your crypto wallet? In all honesty, nobody likes when they lose something valuable to them. Compared to many other investments, barely any asset has gained so much value in the recent past, like cryptocurrencies and companies in the crypto industries. The industry is soaring to new heights, and its success is exposing some vulnerabilities, especially in the security of these crypto assets.
You may have lost your wallet in the past and can relate to how daunting it can be trying to find the wallet. Finding physical wallets is sometimes possible because, hey, there are good people out there. Not in the crypto world! Underlying the crypto-assets is the blockchain technology, which is built for anonymity and immutability: this means that wallet owners cannot be identified, and transactions are irreversible. Therefore, if one gains access to your crypto wallet and transfers cryptocurrencies from your wallet to theirs, it will be impossible to retrieve the cryptocurrencies from them. Below we will discuss some of the wallets you can use to secure your crypto.
1. Custodial Wallets
A custodial wallet is the most popular and easy to set up crypto wallet. Buying crypto using an app like Coinbase, your crypto is automatically held in a custodial wallet, also known as a hosted wallet. A third party keeps your crypto for you hence the name hosted. This operation is similar to how a bank keeps your money in a savings account.
2. Self-custody Wallets
Also known as non-custodial wallets, these wallets support the trade, transfer, and storage of digital assets. They are required to transact with blockchain-based financial applications such as Compound Liquid Pool and other decentralized finance or Defi applications.
3. Hardware Wallets
These are hardware devices that store the user’s private keys offline. They are preferred for cold or long-term storage of huge amounts of cryptocurrencies.
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Best Practices for Keeping your Crypto Wallet Safe
Securing your crypto assets does not have to be left to your crypto exchange alone.
Users hold a crucial role in securing their crypto assets. Here are precautions you should deploy to secure your crypto assets.
1. Keep Your Crypto Offline When Possible
Most crypto holders store their digital assets as a key with passwords in a mobile-based digital wallet. These wallets often connect to the internet, exposing the wallet to vulnerabilities in online environments. One way to ensure the safety of the tokens is by taking the storage offline. Termed as cold storage, using an offline wallet alleviates the potential risk of holding digital assets on hot wallets. Cold storage may be inconvenient for many daily crypto traders, so this option is viable if it suits the crypto holder’s preferences.
2. Use Multi-Factor Authentication
Choose a wallet that deploys two or multi-factor authentication to store your coins. The multiple authorizations mean that access to your wallet is highly restricted, as multiple codes and passwords will be required to unlock the wallet. For instance, a password will be required to log in, and then a code sent to the crypto holder’s smartphone or emailed to authorize the login attempt. Biometric authentication like facial recognition and fingerprints are an added advantage for a crypto wallet.
3. Practice Due Diligence Online and Offline
Ensure you stay alert against phishing emails and potential social engineering tactics. These possible attacks could be either targeted or random and could result in loss of crypto if successful. Ensure you log out ongoing sessions after completing transactions online to avoid losing control of your wallet or even funds.
Growing your Crypto Assets
Prior knowledge is essential before you think of investing in any market, especially the cryptocurrency market. The relatively nascent investment opportunity involves risks like any other. High volatility in crypto prices means that investors could earn huge returns or lose massively within short periods. However, a calculated and well-researched investment in crypto will generally turn profits for crypto investors. Here are some of the ways you can grow your crypto assets:
- Investing – This is the strategy of buying and holding crypto assets for a given period. Crypto assets are well suited for a buy-and-hold strategy. They are highly volatile in the short term but have tremendous long-term potential for growth.
- Trading – While investing is long term, trading, on the other hand, is a short-term method of growing your crypto assets and needs to exploit the opportunities in the shortest time possible. Therefore, traders need to understand the risks and have the proper analytical and technical skills. Crypto volatility means that the prices of assets can soar and drop drastically over a short time, say hours or in one day.
- Mining – You are rewarded with coins when you mine cryptocurrency – that is, by participating in validating transactions and adding new blocks to a chain. To mine, you need technical expertise and upfront investment in specialized hardware for validating the transactions in proof-of-work (PoW) consensus blockchains.
- Crypto Content Creation – Curating, creating, and promoting crypto content for many blockchain media platforms earns significant rewards, either in crypto or fiat currency.
How to Reduce Risk in Crypto Trading
No matter how good you think, your trade setup is, no investment is ever guaranteed to be void of risks. So, managing potential risks to your crypto trading is one of the
most important elements of successful investment. Here are some of the ways you can reduce your risk exposure when trading:
- Trade Quality over Quantity: The key to effective trading is to choose quality over quantity. Traders who overtrade the markets often waste time and money. Not every type of market condition will be conducive to your strategy. Ensure you deploy a dynamic trading strategy by finding quality trades through a trading style that works best for each situation, as well as identifying the right market conditions.
- Have an Exit Strategy: Determine the risk to reward ratio and set your targets for taking profits. Traders can either add to their position during strong trends or lock in profits by scaling out all the way. Identify key support and resistance levels on the charts and map out your trades ahead of time.
- Do Not Use Excessive Leverage: Traders often utilize margin because it increases the order size and allows the flexibility of going long or short. As such, if you deploy excess leverage, your trades will not have enough time to recover, and you can lose your entire principal amount in case of a forced liquidation.
- Avoid Hype: Fear of loss and of missing out may lure a trader into entering potentially bad trades. If you do not research the trade properly or become too greedy, you may miss the dips and buy when the prices are high. A panic sell or cash-out on your position during the dip could also lead to massive losses. So, you must learn to avoid the hype and manage your emotions.
Crypto Wallet for You
Crypto assets are valuable, and you do not want to lose them. Despite the ever-present threats, deploying these discussed strategies will add more layers of security to your crypto assets and ensure you actively ensure they are safe and more profitable to you.
Need a wallet that offers convenient and reliable services tailored for you? Hi.com’s crypto wallet, known as the hi Wallet, is for you. hi wallet is available for mobile, Web, and PC platforms, so you can access your crypto funds whenever and wherever.
Transferring crypto to friends from your hi wallet is free, fast, and secure. Built on the Hi Blockchain, the wallet deploys high encryption to your wallet to keep your funds safe from threat actors.
hi also features a crypto exchange where you can swap tokens directly from your wallet. This way, you can make faster trades and optimize your profit-making investments. Additionally, Hi wallet has a staking feature that offers rewards in HI – Hi’s native token – for users holding crypto in their wallets. hi wallet supports all major cryptocurrencies, including Bitcoin, Litecoin, Ethereum, Dogecoin, USD Coin, Tether, Dai, Binance Coin, and HI.
Signing up for a hi wallet is simple. You can sign up via the web app, here or your social messaging app on WhatsApp or Telegram. Follow the simple prompts and start storing, swapping, transferring, and earning crypto.