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Thanks to the existence of blockchain, now everyone can own digital assets. However, just like any physical asset, digital assets – especially cryptocurrencies –are also susceptible to security threats. Unfortunately, if your digital assets get compromised or stolen, chances of recovery are likely slim to none.
Google search “cryptocurrency hack” and you will find an alarming amount of news on digital currency theft. In May 2019, CNN reported that Malta-based cryptocurrency exchange Binance – one of the world’s largest crypto exchanges – announced that it discovered a “large scale security breach” where 7,000 bitcoins worth around US$40 million were stolen by hackers in one transaction.
Bithumb, South Korea’s largest cryptocurrency exchange, has seen its platform hacked multiple times, putting tens of millions worth of currencies at risk.
In the latest case, nearly US$50 million worth of digital coins were stolen from yet another South Korean cryptocurrency exchange, Upbit, on 28 November 2019.
While these are recent cases, others date back to 2013 – It is simply inevitable that with billions of dollars’ worth of digital currencies floating around online, hackers will be tempted to dip their hands into the virtual money pot. For more cases, check this link. So, what are the best ways to protect your prized digital assets?
Consider the following options that could save you lots of dollars (and heartache!):
1. HARDWARE WALLET
Experts agree that hardware wallets present the safest yet convenient means of storing your cryptocurrencies. You can secure your public address and private keys in your hardware wallet which will be kept offline – away from your computer and the internet – and beyond the reach of those that are up to no good.
Your hardware wallet, a physical device that pretty much resembles a flash drive, can be stored or sealed in a place you deem safe or only you have access to. An important feature that makes this a safe option is when you connect your hardware wallet to a computer, the transaction process is performed in the hardware wallet itself and not on your computer.
Be prepared to play soothing melodies in your head when you hear that the private key will never leave your hardware wallet during the transaction process. However (cue The Walking Dead theme), if you lose your device, it’s bye-bye cryptocurrencies, followed by a period of hating yourself, as your funds are not recoverable. Best avoid misery and back-up your hardware wallet seed in a separate paper wallet.
Ledger Nano S and Trezor One are outed to be among the best hardware wallets in the market and can be purchased online at the following links:
2. PAPER WALLET
Paper wallets are print outs of your public address and private keys in the form of QR codes which you can scan at any point you wish to perform transactions. Beyond the fact that this form of cold storage is completely offline, you don’t have the headache of a potential device malfunction or loss that could happen if a hardware wallet is mishandled or misplaced.
Where paper wallets are concerned, while there is no danger of losing your cryptocurrencies to hacking or malware/virus attacks, it’s important to ensure your computer is safe from malicious software to create a paper wallet, to begin with. Once it is created, it will be your responsibility to ensure it is kept in a secure location to prevent damage, loss or theft.
3. THE GOOD OL’ ANTI-VIRUS
If you are a “crypto maniac”, be sure to have the latest potent anti-virus software installed on your computer. As interest in digital asset investment continues to peak, so does interest from digital crooks to rip those investments out of your hands.
Anti-virus is a good deterrent against malicious software that could or has already set up camp on your computer. If you think investing in top of the range anti-virus software is a costly affair, imagine the cost of losing your prized digital investments. Paints quite a picture doesn’t it?
4. MALWARE MISERY
Although most of us may be familiar with tales of carjackers, in this digital age we now also have to be on guard against cryptojackers. Cryptojacking occurs when cybercriminals plant malicious crypto-mining malware that hides ridiculously well in a computer, diverting funds from unsuspecting victims right into their wallets. All you need to do is log-in to your exchange and be prepared to kiss your cryptos goodbye. For more information on crypto mining, check this link. Just like cryptocurrency is in its infancy, crypto mining too is in its early stages and could get even more lethal as hackers grow wiser. So, get anti-malware protection NOW!
5. THE YUBIKEY TO SAFETY
As it says on their website yubico.com, the YubiKey makes securing cryptocurrency exchanges, accounts and high-value transactions safe and easy. Yubikey is a two-factor authorization (2FA) enabled USB security key designed to keep things simple and secure.
To gain access to your account, simply insert the Yubikey into your computer or mobile device and, with a simple touch of a button, it verifies your authentication. This eliminates the need for authentication via SMS which can be intercepted by hackers.
6. OUR BEST FRIEND GOOGLE
Considered to be one of the most efficient and quickest means of setting up a 2FA for your cryptocurrency account, the Google Authenticator app is an absolute must, especially for newbies, to keep your digital assets safe. It’s available for download in your Google Play Store.
The app generates a one-time password for you to include in addition to your regular log-in information to gain access to your cryptocurrency account. The Google Authenticator may take a few extra minutes of your time but, hey…it’s better than getting your funds phished right?
7. THE VPN WAY
To increase your online security and privacy, look no further than a virtual private network, better known as VPN, to safeguard your digital assets. Cryptocurrency trading using VPN would ensure all your data is encrypted, making it a crucial defense mechanism against hackers.
Simply put, your connection will be encrypted and routed via a VPN server before connecting to the internet. Be it your computer or other mobile devices such as smartphones or tablets, the encryption does the trick to prevent hackers, viruses and malware.
8. THE PASSWORD STORE
A simple open-source password manager like KeePass works too. You store your cryptocurrency account passwords, private keys, and other critical passwords in a database that is locked with a master key.
KeePass requires only one master password to enter the entire database. It can also help generate strong passwords and…it’s free! So, you now you have no excuses for coming up with passwords like P@55word or using your children’s birthdays.
9. DIVERSIFY
The old saying of putting all your eggs into one basket should remain what it is…an old saying. In the age we live in, vulnerabilities exist every step of the way the minute we’re online. Damage prevention may not always be possible, but damage limitation certainly is. Diversifying your cryptocurrencies into multiple wallets, be it hardware, paper, desktop or mobile, is a smart thing to do to limit your losses in the event of a hack.
10. COMMON SENSE
Finally, it all comes down to the small matter of using your head. Be mindful of the sites your surf, links you click, files you download and emails you open. Despite the warning signs, if you still go ahead and download an attachment from an email that claims a Professor Dr. Banana has left you US$5 million in his will, you are beyond help.
It also pays to keep your mouth shut — Don’t flaunt your wealth as if you’re the next big thing in the crypto world as you may just end up with a target on your back.
Disclaimer: This article is meant to provide suggestions only. Readers should perform their own due diligence before making decisions on security and safety.