In early 2009, an entity operating under the alias Satoshi Nakamoto introduced an internet-based medium of exchange known as Bitcoin. Bitcoin was a decentralized network that used cryptography to facilitate financial transactions and a first of its kind. Thousands of digital currencies similar to Bitcoin have been launched since its introduction. According to Yahoo Finance, there are over 5000 cryptocurrencies being traded with a total market capitalization of more than $200 billion today.
Cryptos are virtual or digital currencies designed to work as a medium of exchange. Cryptocurrencies such as Bitcoin have become very popular over the past decade. Part of the appeal comes from the fact that cryptocurrencies are decentralized, meaning that there’s no central authority or server involved which minimizes concerns around secrecy and subterfuge associated with government control. Digital currencies rely on cryptography to secure and confirm transactions as well as to regulate the creation of new units.
Security Concerns
Over the years, cryptocurrencies such as Bitcoin have become a global phenomenon known to most people. Today, you can use cryptocurrency to pay for goods and services online. You can send, receive, or simply store crypto as long as you have a wallet. While cryptocurrency is one of the most secure ways to transact online, the immutable and online nature of the technology behind digital currencies makes them an attractive target for cybercriminals.
Here are some of the most common security risks associated with storing and trading cryptocurrencies.
Crypto Phishing
Phishing is a social engineering tactic used by cybercriminals to steal sensitive user data such as usernames and passwords. Phishing is one of the most common social engineering techniques used to target crypto investors. Cybercriminals will often use phishing to trick cryptocurrency holders to turn over their account credentials or transfer cryptocurrency into the attackers’ wallets. Cybercriminals can even use phishing emails containing harmful attachments to infect your system with malware.
Crypto Stealing Malware
Plain old theft is one of the most common problems facing cryptocurrency investors. If they don’t manage to successfully trick you into transferring money into their wallets via phishing, hackers may deploy malware to steal your coins. There are various types of crypto stealing malware hackers can use to execute such heists. A common type of crypto stealing malware is known to replace the address in the clipboard with the attackers’ address when transferring cryptocurrency to someone.
Hacked Exchanges
Another way for cybercriminals to empty your crypto wallet is through old school hacking. Due to lax security measures and lack of regulation, cryptocurrency exchanges are particularly vulnerable to hacking. Even the largest crypto exchanges, despite their investment in security, are not immune to attacks. Just last year, hackers launched an attack against the largest cryptocurrency exchange by volume (Binance) and made away with more than 7,000 Bitcoin ($40 million).
Ways to Protect Your Crypto Wallet
Your cryptocurrency wallet will always be attractive to online thieves, fraudsters, and scammers. This is especially true if you are holding or transacting with large sums. The lack of a central authority or government interference is one of crypto’s biggest selling points, but it’s also the major source of concern with regard to security. It’s therefore imperative for crypto holders to take full responsibility for the security of their wallets. Here are five cryptocurrency security tips to help you stay protected.
Prioritize Email Security
Phishing remains to be the most prolific method for hackers to gain access to confidential information such as passwords. Phishing scams via malicious emails and ads are rampant in the crypto world. Cybercriminals often use phishing emails to trick crypto holders into sharing their login credentials or transfer funds. To make sure that you don’t get phished, use a secure email service with a strong set of anti-phishing protections. Also, don’t click suspicious or unknown links and be careful when making transactions.
Use a VPN
Use only a secure internet connection and avoid public Wi-Fi networks when trading or making cryptocurrency transactions. Alternatively, connect to a VPN server to ensure the security of your digital coins. A VPN (Virtual Private Network) is one of the most effective security tools when it comes to keeping your crypto wallet secure. It hides your IP address and scrambles your internet traffic. Using this service keeps your browsing activity private and ensures your anonymity.
Setup Two-Factor Authentication
Many cryptocurrency exchanges support two-factor authentication (2-FA). You need both a password and an OTP (One-Time Password) to access your account when you have 2-FA enabled. Two-factor authentication provides an extra layer of security and makes it harder for threat actors to gain access to your account and steal your digital coins. To login to your account, you will need both the account password to your wallet as well as in the form of an SMS, YubiKey, or Google Authenticator.
Use a Hardware Wallet
A hardware wallet refers to any electronic device — such as an external hard drive or a flash drive — purposely built to keep cryptocurrency secure. Internet-connected devices such as computers are vulnerable to threats such as hacking and should not be used to store digital assets such as cryptocurrency. With a hardware wallet, you can safely generate and store private keys offline where hackers have no way of accessing your digital coins. You can even protect your hardware wallet with a PIN code.
Install Antivirus Software
Cybercriminals are increasingly using malware such as CryptoShuffler to steal digital coins from infected computers. CryptoShuffler is a trojan that is designed to spot a cryptocurrency address in the clipboard and replace it with the attacker’s preferred address. Use reliable antivirus software in your computer to detect and prevent such malware from being installed on your computer. Keep your antivirus software up to date to ensure that it has all the latest virus and malware definitions.
Cryptocurrencies are virtual or digital currencies designed to work as a medium of exchange and have become very popular in the last few years. If you have a crypto wallet, you can trade and store digital currencies. However, crypto wallets attract thieves and scammers and because there’s no central authority overseeing cryptocurrencies, it’s up to crypto investors to take the necessary measures to protect their digital assets.
