Like any other financial asset, cryptocurrency owners are open to security risks. From phishing attacks and identity thefts to exploring vulnerabilities to steal people’s personal information, cybercriminals are unrelenting in their attempt to steal investors’ assets.
Therefore, it’s essential to take some security measures to keep your investment in crypto coins safe. This article is a guide covering a comprehensive security checklist containing precautions you should take and everything you need to know about securing your crypto assets.
What Is Cryptocurrency?
A cryptocurrency is a virtual currency that uses cryptography to verify and secure transactions.
All crypto transactions are done, processed, confirmed, validated, and recorded on the blockchain. The blockchain is the system that makes crypto transactions possible.
Bitcoin, the first cryptocurrency, was created in 2009, right after the 2008 financial crisis, by an anonymous person or group known as Satoshi Nakomoto.
Satoshi’s mission was to create a financial asset that could hedge against inflation and preserve investors’ funds if a second occurrence of the 2008 inflation crisis ever happened again.
In addition, the crypto coins or tokens will be used as a digital peer-to-peer payment method.
More than a decade later, there are over 5000 cryptocurrencies. Today, crypto coins are not only used as a virtual currency, but are considered a financial asset that can be invested in.
Investors consider crypto a good investment because of its potential to increase in value and how it can be used to hedge against inflation.
But as crypto is becoming more popular, so is investors’ growing concern about the security of their crypto assets.
What is Crypto Security?
As an investor, one of the questions you’ll be eager to find answers to is how safe crypto investments are. Crypto security involves all the processes required to ensure that cryptocurrencies are secure and protected from loss.
Crypto security is largely dependent on the blockchain. The blockchain is the underlying technology that powers every activity with cryptocurrencies, such as buying and selling, staking and framing, and more.
The blockchain provides security for crypto transactions through hashing for transaction verification, private keys to grant users access to their accounts, digital signatures to allow users to make transactions, and public keys to record their transactions in the public ledger.
But, with all these security mechanisms, is that enough to keep crypto secure?
Is Crypto Secure?
When considering crypto security, there are three standpoints to evaluate. First is the crypto exchange, where you buy your crypto coins.
Crypto exchanges ensure their platforms are secure and less liable to get hacked by running security audits periodically.
Secondly, the type of cryptocurrency you buy matters. There are thousands of crypto coins in the marketplace, and not all are legit.
Some crypto coins are scam tokens, and when you buy them, you won’t be able to profit from them, and in some cases, you will lose your capital. It’s advisable to research and go for tokens with popular creators, social proof, and good community support.
Lastly, as an individual, your cryptocurrency security is majorly dependent on your crypto wallet security. So, if your crypto wallet is protected, your cryptocurrencies will be secured. So, what crypto security solutions should you use to keep your investments safe?
Security Standards for Cryptocurrency
Crypto security standards are a list of protocols that help define what systems can be used to provide, assess and ensure the security of cryptocurrencies.
These security standards apply to crypto exchanges, mobile and web apps, and other devices users use to interact with crypto.
Cryptocurrency Security Standards are crypto security software and tools to help users identify credible platforms and tokens for smart investment decision-making. So, if a crypto exchange or wallet provider does not have these standards, it’s better to avoid them.
Here’s a list of the security standards for cryptocurrency.
- Generation of private keys or seed phrases
- Creation of a unique crypto wallet
- Ultra-secure storage of keys
- Public and private key usage
- Clearly defined key compromise policies
- Grant/retract policy privileges of key owners and similar procedures
- Third-party audits
- Data Policies
- Proof of Reserve
- Verifiable audits of transaction logs
When all these standards are in place, users can interact securely with a crypto platform.
Threats to Crypto Security
Knowing what threats are associated with crypto security will help you understand how to avoid them and stay secure. Here are the top crypto security threats you should be aware of.
Poor security practices
If you use simple passwords for important accounts like your email and web applications, you’re more exposed to being hacked than those who use stronger passwords.
In addition, using one password for all your accounts will pose a greater risk eventually. Instead, use different passwords for different sites and store them in a trusted password manager.
Poor Safeguarding of Private Keys
Your private keys are the passwords or seed phrases that give you access to your crypto wallet. This is prominent for people who use blockchain wallets like Metamask or Trustwallet.
Remember, whoever has access to your private keys has control of your account. If someone else gets access to your keys by hacking into your account or wherever you stored it, you could risk losing all your crypto.
Phishing attacks
Phishing is when someone creates a replica of an original website. Phishing links appear to look the same as the original link, but on a closer look, there are slight differences.
For example, google.com is an original link; a phishing link will look like g-oogle.com or goo-gle.com. They appear to have the same letters, but each is different.
When you click on a phishing link, hackers can get access to your personal information and use that info to hack into your account.
Rug pulls
Rug pulls are becoming increasingly common in crypto. A rug pull is a scenario where investors invest early into a crypto project, especially during its initial coin offering (ICO), but lose all their investments due to the crypto developer or team abandoning the project and fleeing with investors’ funds. Investors are left with nothing or a ton of tokens with zero value.
How Do You Protect Your Investments in Cryptocurrency?
Although everyone is exposed to security risks one way or the other, as a crypto investor, you can minimize your risk by keeping to some security measures. Here are five useful crypto security best practices for your investments.
Keep your private keys safe
As mentioned earlier, anyone with your private keys can access your crypto wallet. Where you store your keys determines how safe they are.
It’s advisable not to keep them on your PC, email, or a note app. You can write them in a notepad and store them in a secure place offline, or consider using a recommended password manager.
Use a strong password
While that might sound simple, many people don’t adhere to it. A good password length is about 8 characters long and is a mixture of capital letters, symbols, and numbers.
Your password should be close to something you cannot pronounce; it’s usually more difficult for hackers to unlock such. In addition, setting up a 2-factor authentication will ensure your account is not easily accessed and compromised.
Research on Crypto Platforms
New crypto platforms are springing up now and then, including crypto exchanges, defi apps, and crypto wallet apps. Before you sign up on a platform, ensure you understand its security protocols to prevent unforeseen loss of your crypto assets.
Be wary of support scams on Twitter
Like any other social media app, scammers and hackers are also on Twitter. They pose as support channels for top crypto coins or exchanges and try to get your personal information, so they can access and steal your funds.
If you need assistance with your crypto account, ensure you only message an official customer support channel. Never share your seed phrase, password, or email login with anyone online.
Don’t fall for fraudsters in direct messages on Discord.
Discord is the number one community for non-fungible tokens (NFTS) collectors, creators and traders. There are many communities with ongoing NFT projects, a likely place to find hackers and thieves.
They might message you with a phishing link similar to the server you’re in, telling you that you’ve won an NFT and providing a link to click to claim your reward. If you click the link and connect your wallet, you’ll be emptied of everything in that wallet.
Hence, it’s advisable to adjust your settings to prevent random strangers from entering your direct message and avoid clicking on suspicious links.
Tools to Protect Your Crypto Investments
Here are five tools to protect your crypto assets from security threats.
Anti-Virus Software
Hackers create viruses to attack computers, cause damage and steal your data and resources. Cyber threats are in different forms, ransomware, trojans, and more. Antivirus software on your device will help identify and prevent these anti-security threats from compromising your device.
Anti-Malware Software
Anti-malware software might sound similar to antivirus software, but they’re different. Anti-malware software protects your devices from spyware, adware, and worms.
Some apps are programmed to download automatically to your device; anti-malware identifies any such malicious software and prevents it from accessing your computer system.
Password Manager
A password manager is a simple tool you use to save your passwords and seed phrases. Some of the best crypto security keys storage include Roboform, LastPass, and Dashlane. Ensure you research and read reviews on whichever service you intend to sign up for.
Hardware Wallet
A hardware wallet is the most secure storage for cryptocurrencies. It is not connected to the internet and is not a component of your computer system, making it less liable to cyberattacks. The most popular ones are Ledger Nano and Treszor hardware wallet models.
Conclusion
Crypto security is essential for crypto services such as exchanges, password managers, wallet apps, and users. You can keep your crypto assets safe by keeping to the security practices highlighted in this article. To stay secure, ensure your devices, crypto accounts, wallets, and passwords are protected using top-tier crypto security tools.
