Security in Crypto: How to Reduce Risks & Improve Safety of Digital Currencies?
By this time, you’re sure to have heard about cryptocurrencies and the hundreds of millionaires it has made.
You might be looking into investing in digital currencies yourself. But do you know what a hardware wallet is, or which tools can help you prevent data loss?
If these questions leave you scratching your head, we suggest pumping the brakes on your investment plans. It’s important to understand the risks involved in trading cryptocurrencies before diving in headfirst.
In this post, we’ll go over some of the most common security risks to be aware of when handling digital assets.
The Risks of Cryptocurrency
It’s easy to forget just how new cryptocurrencies are. Some people treat them as they would fiat currencies, but the truth is that cryptocurrencies are a whole new beast.
Traditional fiat currencies have laws and regulations in place to help protect people from fraud. Digital assets do not—which means you’ll have no one to lodge a complaint to if, say, you lose your wallet.
Here are some of the most common security risks when working with cryptocurrencies:
- Hacking – Cryptocurrencies are often stored in online wallets, which makes them susceptible to hacking. Several major exchanges have been hacked in recent years, leading to the loss of millions of dollars worth of digital currency.
- Phishing – Phishing is a type of fraud that involves tricking people into giving up their personal information, such as passwords or credit card numbers. This can be done via email, social media, or even fake websites.
- Scamming – As cryptocurrencies become more popular among the general populace, scammers are coming up with new ways to trick people out of their hard-earned money.
- Losing access to your wallet – You can steer clear of scams and hacking attempts, but there’s always the risk of simply losing access to your wallet through loss of secure internet access for example.
These are just a few of the many risks associated with digital assets. Now that you know what to look out for, let’s enjoy learning about four of the best ways to keep your crypto safe.
How to Keep Your Crypto Safe?
There’s no such thing as a guaranteed foolproof method for security. However, there are steps you can take to make it significantly harder for someone to hack or scam you.
Here are four of the best ways to keep your digital assets safe:
1. Use a password manager
Unlike the passwords you use for your email or social media accounts, the passwords you use for your crypto wallets should be incredibly strong and unique—so much so that even you won’t be able to recall it offhand. Gaining access to a crypto wallet is all that’s needed to start emptying it, so you want to make sure that’s as difficult as possible for would-be thieves.
A password manager can help by generating and storing long, randomly generated passwords for you. That way, even if one account is compromised, your other accounts (including your crypto wallets) remain safe and sound.
2. Regular backups
Just like you should keep multiple copies of your important documents in case of fire or flood, you should also create multiple backups of keys/seeds in case your computer is lost or stolen, or in case of hardware failure.
You should never store backups of your keys/seeds online or on a device that isn’t under your direct control. If possible, we suggest keeping backups on paper as well as digitally and storing them in different locations.
Regular backups can be a pain to manage, especially if you’re storing multiple copies of your keys/seeds in multiple places, but they are essential to ensuring your crypto assets remain secured at all times.
3. Set rules for using your wallet/key
Setting out some basic rules for handling your wallet and key might seem to be a superfluous thing to do when you’re early on in your cryptocurrency journey.
Following rules designed to maximize your safety is much easier than tackling issues as they come up. Deciding on the rules you’ll follow from the beginning will help to keep you safe and stress-free as you progress in your investment journey.
Some examples of rules you can set for yourself include:
- Not accessing your crypto wallet while intoxicated or emotional.
- How many people know where your main hardware wallets are stored.
- Not storing backup keys/wallets in nearby places.
4. Continuous security assessments
You might think that you’ve covered all your bases by performing a one-time assessment of your crypto security posture. But security is an ever-evolving field, and what might have been considered secure yesterday might not be secure today.
This is even more true in the crypto space, where things move much faster than in other industries. While securing your crypto using the above methods is still a good idea, we can’t guarantee that hackers will find a loophole and bypass those measures in the future. That’s why continuous security assessments are so important for crypto users. They help you identify weaknesses and take steps to fix them before they are exploited.
Try to keep abreast of all the latest crypto security developments as well. You can do this by joining a crypto-security forum or subscribing to relevant blogs, newsletters, and podcasts. This will help you stay informed about the latest threats, as well as best practices for staying secure.
Wrapping Up
Following our tips above won’t guarantee that your crypto is fully safe from all threats. But it will put you in a much better position to defend against attacks and minimize the risks. As a last resort, you can always convert crypto into cash. So, make sure to implement these measures sooner rather than later. By taking the time to educate yourself on security and staying up to date on the latest developments, you can sleep a little easier knowing that your crypto assets and wallet/keys are as safe and secure as possible!