Cryptocurrency is a hot topic right now and, with the rise in the value of Bitcoin and other digital currencies, more people are looking to invest. If you’re one of those people, it’s essential to pay attention to crypto wallet security and protect your investment.
Keep reading to find out just how to do that.
What is a Crypto wallet?
Firstly — what exactly is a crypto wallet? In the simplest of terms, a cryptocurrency wallet is a digital piece of software that allows you to store, send, and receive digital currencies.
Most crypto wallets allow you to interact with different blockchains in order to conduct transactions. Here you will find a list of best crypto wallets to use.
Each wallet stores two types of information: a private key and a public key.
- Your private key is like your bank account number — it’s a unique number that allows you to access your cryptocurrency.
- Your public key is like your bank routing number — it’s a number that allows others to send money to your wallet.
Each crypto transaction requires both keys in order to be completed. That being said, it’s critical that you keep your private key safe and secure, as it’s the only way to access your crypto wallet.
Are there any crypto wallet security issues?
The short answer is: yes. Like anything else that exists online, there are always security risks regarding digital wallets. The following are some of the most common issues related to crypto wallets:
Deanonymization
Deanonymization is when a third party is able to identify the owner of a digital wallet by tracing transactions. This could happen, for example, if you use a Bitcoin mixing service that is later hacked.
DoS attacks
A denial-of-service attack is when a malicious actor floods a digital wallet with so many requests that it becomes overloaded and can no longer function properly.
User authentication problems
If a digital wallet doesn’t have proper user authentication in place, it could be possible for someone to gain access to your account and steal your funds.
Platform trust issues
When you use a digital wallet, you’re trusting that the platform will keep your private keys safe. However, there have been instances where platforms have lost users’ private keys or otherwise been hacked.
Cryptographic flaws of crypto wallet apps
There are also cryptographic flaws that can exist in cryptocurrency wallets. For example, a recent study found that many Bitcoin wallet apps use insecure random number generators, which could make them susceptible to attack.
End users’ lack of data security
Another security issue to be aware of is end users’ lack of diligence or reluctance to improve data security. This means that people are often not diligent about keeping their digital wallets secure. They might, for example, use weak passwords or store their private keys in an insecure location.
How to protect your cryptocurrency
Now that you know about some of the potential security risks associated with digital wallets, you’ve probably realized that it’s important to take steps to learn about crypto wallet security.
Keep in mind that while there are security risks associated with digital wallets, there are also security risks associated with traditional, fiat-currency wallets. The important thing is to be aware of the risks and take steps to mitigate them.
How to protect your crypto wallet
1. Use a secure platform
When choosing a digital wallet, use a secure and reputable platform. Do some research to ensure that the platform has a good reputation and has security measures to protect users’ private keys.
A bit of research can go a long way in ensuring the security of your digital wallet. By only dealing with good actors in the space, you can minimize your risk.
2. Use a strong password
When creating your account, use a strong password that can’t be easily guessed by someone else. Avoid common words like “password” or your date of birth. Instead, use a combination of letters, numbers, and special characters.
You can use a password generator like LastPass to create a strong, unique password for your account.
3. Use a hardware wallet to store your private keys offline
One of the most secure ways to store your private keys is on a hardware wallet. Hardware wallets are physical devices that allow you to store your private keys offline. This means that even if your computer is hacked, your private keys will be safe.
Two reputable hardware wallets are the Ledger Nano S and the Trezor.
4. Enable two-factor authentication
If a platform offers two-factor authentication, be sure to enable it. This adds an extra layer of security to your account by requiring you to enter a code from your phone or another device in addition to your password.
While not foolproof, two-factor authentication can go a long way in protecting your account from being hacked.
5. Keep your software up to date
Keep your digital wallet software up to date with the latest security patches. By doing this, you’ll be able to protect yourself against any new security vulnerabilities discovered.
6. Make use of multiple crypto wallets
You don’t have to rely on just one digital wallet. In fact, it’s often a good idea to use multiple wallets. This way, if one wallet is compromised, your other assets will still be safe.
7. Avoid public Wifi
When accessing your digital wallet, avoid doing so from public Wifi. This could be a hot spot for hackers looking to steal people’s private keys. Here we prepared for you a guide on how to use public WiFi safely, so don’t forget to check it too.
Better yet, always use a good VPN for crypto wallets. This will encrypt your traffic and make it much harder for hackers to steal your private keys. We recommend using ClearVPN service for it’s high connection speed and security. Download ClearVPN app for you device here.
8. Don’t share your private keys
It goes without saying that you need to keep your private keys safe and secure. Avoid sharing them with anyone other than a family with whom you’ll entrust your estate in the event something happens to you.
9. Backup your digital wallet
Be sure to back up your digital wallet in case you lose access to your account or device. This will ensure that you don’t lose your funds if something happens to your device.
Come up with a schedule for backing up your digital wallet and stick to it. That way, you’ll always have a recent backup to fall back on.
10. Keep your recovery phrase safe
If you’re using a software wallet, you’ll be given a recovery phrase when you set it up. This is a string of words that can be used to regain access to your account if you forget your password. Keep this phrase safe and secure in a location only you have access to.
FAQs
Are cryptocurrency wallets secure?
Cryptocurrency wallets are generally secure, but there are some security risks to be aware of. Be sure to take steps to protect your digital currency, such as using a strong password and storing your private keys offline in a secure location.
What is a recovery phrase?
A recovery phrase is a string of words that can be used to regain access to your account if you forget your password. Keep this phrase safe and secure in a location only you have access to.
What should I do if I lose my private keys?
If you lose your private keys, you’ll lose access to your digital currency. Be sure to back up your digital wallet in a secure location so that you can recover your funds if this happens.
So there you have it — a few tips on how to protect your crypto wallet. Be sure to take these precautions to help keep your digital currency safe. Always keep in mind that crypto is a constantly evolving space. Perhaps the best way to keep your crypto wallet safe is to always be on the lookout for new threats and take steps to protect yourself accordingly.