Just weeks ago, Bitcoin surpassed the $10,000 mark for the first time, growing tenfold since the beginning of the year and showing that the immense popularity and growth of cryptocurrency is undeniable. But as we’ve mentioned previously in our blog, cryptocurrency has been met with skepticism due to its lack of regulation. Despite the risks and concerns, it seems like cryptocurrency is here to stay. Whether you spend it on a virtual cat (TechCrunch recently reported that people have spent over $1 million buying virtual cats on the Ethereum blockchain) or on more traditional investments of Bitcoin, safely storing your cryptocurrency is necessary. This blog post will aim to provide readers with tips to keep your cryptocurrency and wallets safe from hackers.
1) Use a unique email specifically for the exchange account.
Online cryptocurrency exchanges are websites where users can buy, sell or exchange cryptocurrencies for other digital currency or hard money. However, it’s important to note that just because these exchanges allow users to manage cryptocurrency, it doesn’t make them banks. Therefore, they should not be treated as so — even if there are security measures in place. By registering an email specifically for the use of an exchange, you can minimize the risk of falling victim to a phishing scam that aims to ultimately steal your credentials of your exchange account.
2) Choose a strong password and enable 2FA for account recovery.
Approximately 3.8 million Bitcoins are thought to be “lost” and can be attributed to reasons ranging from coins going out of circulation, to users throwing away hard drives where cryptocurrencies are stored, or simply forgotten passwords. Passwords are the gatekeepers to your exchange account, so creating a strong password is a must. Needless to say, if a hacker is able to crack your password, you risk the chance of having your cryptocurrency stolen. Additionally, enabling 2FA for the email associated with your exchange account also reduces the risk of falling victim to “phone porting” attacks — attacks that, if successful, permits a hacker to to reset the password on your account by transferring a verified phone number to a device he or she owns, typically done by impersonating the victim via a convincing call to a customer service help line.
3) Avoid talking about cryptocurrency publicly, especially across social media platforms.
Social engineering is a tactic that never gets old. Mentioning the word “cryptocurrency” on social media platforms can spark interest among the wrong kind of people. Hackers snooping around social media can easily make use of such information to perform a “phone porting” attack and ultimately take over your cryptocurrency account. Such was the case for one unfortunate user who lost $8,000 in cryptocurrency due to a combination of social engineering tactics and “phone porting.” Whether it be on your personal social accounts, forums, or other platforms, be wary of revealing sensitive information online.
4) Don’t store all your cryptocurrency investments in one location.
A good tip, as recommended by experts, is to “diversify” your risks by distributing cryptocurrency assets across different exchanges. Some popular exchanges include Coinbase, Kraken, and Bitfinex. As mentioned in tip #1, in the event where you are hacked, using different emails and passwords for different exchanges makes it more difficult for the hacker to steal all of your cryptocurrencies. Just remember to keep track of the emails and passwords associated with your multiple exchange accounts!
5) Consider keeping your cryptocurrency off the internet.
To reduce the risk of hackers using online hacking techniques to get to your cryptocurrency, consider using a “cold wallet.” A cold wallet is a way to store cryptocurrency on a dedicated computer which is not connected to the internet. Users typically create cold wallets by downloading a “cold wallet application” into a USB and then loading it onto an “offline” computer that is not connected to any network. Receiving payments without being online is possible when you run the cold wallet application as it stores private wallet keys on a clean air-gapped computer. However, you must be online to send payments. By disconnecting transactions from a live network, you can minimize the risk of external tampering.
Just because cryptocurrency-based transactions are virtually untraceable, that doesn’t make the technology behind it hack-proof. Popular exchanges are still prone to security mishaps like bugs and hacking. Users are also vulnerable to phishing and smishing attacks that can lead to users losing access to their exchange accounts and therefore their cryptocurrency. For hackers, there is always a way in with some effort. Are you keeping your cryptocurrency safe?