Cryptocurrency has taken the world by storm, and for good reason. The technology behind it is innovative and has the potential to change the way we think about money and financial transactions. However, with the rise in popularity of cryptocurrencies, it’s important to be aware of the potential risks and take steps to protect your investments.
In this guide, we’ll take a closer look at why cryptocurrency security is essential, the potential threats you should be aware of, and provide insider tips on best practices to protect your crypto investments.
Why did Cryptocurrencies gain popularity?
If you’ve been oblivious to the rise of popularity in cryptocurrencies, here’re three key reasons.
The rise of cryptocurrencies like Bitcoin and Ethereum have brought a wave of excitement to both tech geeks and traditional financial professionals alike. Cryptocurrency offers near-instantaneous transactions, anonymity, and borderless payments – making it attractive to those seeking a more flexible financial system.
One of the main draws is the decentralized nature of the technology. Unlike traditional currencies, which are controlled by governments and financial institutions, cryptocurrencies are powered by blockchain technology, which allows for peer-to-peer transactions without the need for a middleman. This decentralization also makes cryptocurrencies more resistant to inflation and government control.
Another reason for the popularity of cryptocurrencies is (unfortunately) the potential for big returns. Bitcoin, the first and most well-known cryptocurrency, has seen its value increase dramatically since its inception. Many other cryptocurrencies have also seen significant gains.
Why is Crypto Security Essential?
While the technology is awe inspiring and the potential for big returns is certainly a draw, it’s important to note the downsides. The biggest downside to a decentralized, transparent technology is that anyone can trace transactions and track cryptocurrency assets just by using a publicly known wallet address.
Hacker groups continually target wallets and exchanges in an effort to steal users’ funds.
As investors, you must remain vigilant when dealing with cryptocurrencies or risk losing your money due to theft or fraud.
This is why crypto security is essential. Without proper security measures in place, your investments could be at risk.
2 Key Risks and Threats to Your Crypto Security
There are many potential threats when it comes to protecting your cryptocurrencies, these are 2 key risks you must keep in mind:
i) Hacking
One of the biggest threats to crypto security is hacking. Because cryptocurrencies are stored in digital wallets, they are vulnerable to hacking attempts.
Hackers are known to employ a variety of tactics such as:
- hacking into compromised exchanges,
- exploiting gaps in code of a project or even exchanges,
- sophisticated phishing attacks,
- exploit software vulnerabilities,
- introducing malware or ransomware,
- take advantage of lapses in personal security practices (such as laptop theft).
ii) Fraud
Another potential threat to crypto security is fraud.
Because the cryptocurrency market is relatively new and unregulated, there are many fraudulent projects and schemes that can take advantage of unsuspecting investors. These scams can take many forms, such as Ponzi schemes, fake ICOs, and pump-and-dump schemes.
We have covered the 5 common crypto scams previously, do read that and be aware of what you may be exposed to.
How To Protect Your Cryptocurrency?
Crypto security is something you should take seriously. Now that you understand the threats, here’s how to protect your crypto assets:
The most important step you can take to protect your cryptocurrency is to take responsibility for your own security. This means taking steps to mitigate against the threats mentioned above.
Best Practices In Crypto Security
- Always withdraw your crypto from exchanges
storing your crypto on exchanges is convenient however you risk losing everything in your account should the exchange go bust. And several have gone bust in the short history of cryptocurrency. Withdraw your crypto and store them in a hardware wallet!
- Get a hardware wallet
Hardware wallets are physical devices that store your cryptocurrency offline. This makes them much more difficult to hack than software wallets, which are stored on your computer or mobile device. If you plan to hold your crypto long term, don’t scrimp on security.
- Use a strong and unique password
Make sure to use a strong and unique password for your digital wallet and never reuse the same password across multiple accounts.
- Use a password manager
A password manager can help you generate and store strong and unique passwords for your digital wallets and other online accounts.
- Use two-factor authentication
Two-factor authentication (2FA) adds an extra layer of security to your digital wallet by requiring a second form of verification, such as a fingerprint or a code sent to your mobile device.
- Hold your seed words dear
Seed words are a set of randomly generated words used to secure and recover your cryptocurrency wallets. They serve as your “secret recovery phrases” that serves as the master key to your accounts. These seed words are often referred to as mnemonic phrases, recovery phrases or backup phrases. Back up yours offline, in a safe location. Do NOT store them digitally in your computer or cloud storage as that would make them accessible in case of malware attacks.
- Keep your computer and mobile device secure
Keep your computer and mobile device up-to-date with the latest security patches and use a reputable antivirus software.
- Be aware of phishing scams
Be aware of phishing scams, which are attempts to trick you into giving away your personal information. Always double-check the URL before entering any sensitive information!
- Beware of public Wi-Fi
if you’re planning to execute a crypto transaction, do it on a secure, private network instead. This prevents busybodies from peeking at your transactions.
- Use VPN
VPNs can protect you from the common “Man-in-the-middle” attacks where hackers can intercept your connection and monitor your behavior online.
- Don’t open unknown URLs or attachments in your email
These are the best way to introduce malware to your computer. If you are not sure about the sender or didn’t request for any files and information via email, don’t click on them!
- Always back up your wallet
Always keep a backup of your digital wallet in case of accidental loss or theft.
- Do your research
Before investing in any cryptocurrency, make sure to do your research and only invest in reputable projects.
Conclusion
Cryptocurrency has the potential to change the way we think about money and financial transactions, but it’s important to be aware of the potential risks and take steps to protect your investments.
Cryptocurrency security doesn’t have to be difficult. With the right security measures in place, you can enjoy the potential returns of cryptocurrency while minimizing the risk of fraud and hacking.
By following the best practices outlined in this guide, you can protect your crypto and keep your coins safe. Remember, security is a continuous process, so always stay informed and take active steps to protect your assets.