Making the decision of which crypto to buy, thanks to proper analysis, is one thing. At Kryptview, we’ve got you covered thanks to quantified fundamental data generated by the community! Knowing how to secure your assets after purchase is yet a whole other thing. Here are some tips on how to protect your cryptocurrencies against hacking, theft, and other security threats, beyond the inherent safety of blockchain technology.
Where to store your cryptos safely?
There are several places where you can store your cryptocurrencies.
Centralized exchanges contain risks
A CEX (Centralized Exchange) is a traditional exchange that is operated by a centralized entity, which means that all of the exchange’s operations are managed by a single company or organization. When you use a CEX, you deposit your cryptocurrencies into the exchange’s custody: they hold them on your behalf. This means that the exchange is responsible for keeping them safe from theft or loss. Reassured that somebody does the tricky job for you? Careful, because there are risks associated with keeping your cryptocurencies on a CEX.
If the exchange is hacked, your cryptocurrencies could be stolen. In case the exchange becomes insolvent and goes bankrupt, it could also result in a loss of your assets. Finally, CEXs are vulnerable to insider threats, such as employees who may have access to your funds. The collapse of FTX that happened at the end of 2022 is a hot example of such real risk.
For these reasons, it is considered safer to store your cryptocurrencies on non-custodial wallets.
Opt for non-custodial wallets
- To avoid centralization and keep control over your digital assets, you can store them on a non-custodial hot wallet, such as MetaMask. In that case, you are responsible for keeping your own cryptocurrencies safe, rather than relying on an external entity to do so. While this may seem more secure, there are also risks associated with using DeFi and an online non-custodial wallet. For example, if you lose your private keys or if your wallet is hacked, you can lose your assets forever. In the next section, we describe some of the most important practices to observe in order to keep your cryptocurrencies safe when stored on a non-custodial wallet.
- The safest way to store your cryptos is definitely to use a cold wallet (hardware wallet). Hardware wallets are physical devices designed specifically for storing and managing digital assets. They are called “cold” as opposed to “hot wallets”, which are software wallets and thus online, even if not accessed by the user. For this reason, cold wallets provide a high level of security by storing your private keys offline and away from potential attacks. Some popular hardware wallet brands include Trezor and Ledger. Only purchase those from official websites!
Security best practices for your online cryptos
What is phishing?
One of the biggest risks to the safety of your digital assets, if they are stored on a hot wallet, is the possibility of falling victim to a phishing attack. Phishing is a type of cyber attack where a malicious actor tricks the victim into giving away their sensitive information, such as private keys, by posing as a legitimate entity.
One common method used by phishers is to send malicious emails or private messages (on social platforms such as Discord or Twitter) that contain links to fake websites. These websites look like legitimate cryptocurrency exchanges, wallet providers or marketplaces, asking you to enter your login credentials or other sensitive information, such as approving a transaction on your cryptocurrency wallet or sending money to purchase a (fake) digital asset. If you enter your information on this fraudulent website, the phisher can use it to steal your assets.
How to protect yourself from phishing?
To avoid falling victim to a phishing attack, you can observe the following security best practices:
- Use strong and unique passwords: Create strong and unique passwords for all of your cryptocurrency accounts. Avoid using easily guessable information such as your name, birthdate, or common words. Instead, use a combination of upper and lowercase letters, numbers, and symbols.
- Enable two-factor authentication: Two-factor authentication (2FA) adds an extra layer of security to your cryptocurrency accounts. With 2FA, you need to enter a unique temporary code in addition to your password to access your account. This helps to prevent unauthorized access even if your password is compromised.
- Store private keys securely: Your private keys are the keys to your cryptocurrency assets, and it’s important to store them safely. Avoid storing them on your computer or online, as these are vulnerable to hacking. Instead, store them on a hardware wallet or write them down on a piece of paper and store it in a secure location.
- Be cautious when downloading wallets and apps: When downloading cryptocurrency wallets or other apps, be sure to download them from a reputable source. Avoid downloading wallets from untrusted sources, as these could contain malware or other security threats.
- Avoid public Wi-Fi: Public Wi-Fi networks are often unsecured and can leave your cryptocurrency accounts vulnerable to hacking. Avoid accessing those accounts on public Wi-Fi networks, and only use secure and encrypted connections when accessing your accounts.
- Keep softwares up to date: Regularly update your hardware wallet, wallet software, antivirus and anti-malware software to ensure that you have the latest security features and bug fixes.
- Do not click on unknown links: Be cautious when clicking on links. Before clicking on any link, you should verify that it is legitimate by carefully checking the URL and the domain name of the website. Be especially cautious if the link is sent to you via email or message, as these channels are commonly used by phishers. Be especially wary of links sent by people you don’t know.
- Close your DMs: Set the parameters of your social apps such as Twitter or Discord not to allow someone who is not already among your friends list to contact you via Direct Message. This adds a layer of verification and will reduce the risk of you clicking on malicious links by inattention or in a rush.
Knowing how to keep your cryptocurrencies safe is crucial to protect your assets against threats. When you hold for a longer term, consider splitting your assets between a hardware wallet – for the assets you won’t need for a while – and a hot wallet for ongoing transactions. By following the basic security practices described in this article, you can decrease the risk of exposing your cryptos to a hack, a scam or an attack.