Many people start out trading their cryptocurrencies through 3rd party wallets or services, but there are risks involved when keeping them locked up in these accounts.
As the popularity of cryptocurrency has increased, so has the crime rate surrounding it. Cybercriminals have realized that with the existence of currency comes a greater potential for acquiring personal wealth. Most forms of cryptocurrency scams include phishing scams, malware, or ransacking hard drives and using passwords, PINs, or seed phrases. Many cryptocurrency users avoid these dangers by storing their funds in secure wallets that can only be accessed when connected to the internet via a device they are aware is secure.
As the underground market continues to expand rapidly, eager thieves are discovering newer methods keen on improving their ability to penetrate systems security. To combat this new threat, it is vital for digital currency owners always to ensure any company used for work related to cryptocurrency transactions invokes an extremely secure environment where assets cannot be stolen during transfers from one account to another.
Cryptocurrency scams skyrocketed in 2022
The latest FTC report shows that frauds and scams related to cryptocurrency have skyrocketed since 2016. From stealing investors’ coins to phishing emails, securing your digital currency’s sensitive information is essential for protecting yourself against identity theft.
Having smooth crypto transactions via digital wallets on mobile, and keeping sensitive user information secure in a crypto wallet app becomes more critical.
Let’s understand the issues challenging a digital wallet’s security measures.
Platform trust issues of mobile crypto wallets
There are three types of crypto wallets – web, mobile, and desktop.
Each one is at risk of being attacked by a cybercriminal for specific reasons.
Mobile digital wallets that are most popular for accessing personal crypto wallets online have security weaknesses.
They often do not check if the device is trusted: rooted or jailbroken, if it has a potentially harmful app or reverse-engineering tools installed, etc. These can easily make such wallet platforms target hackers who wish to steal funds from your account.
In the past, we have read how existing malware like Pegasus or any Trojan-horse like iOS/Android Apps are ticking time bombs to gain access to users’ credentials, mnemonics, private keys, or other sensitive data that apps leave stored in their memory.
How to secure your Crypto Wallets
In the section part, we want to talk about storing your crypto safely so you can avoid scams and theft related to cryptocurrency.
1: Use a Cold Wallet
Many people have heard about “cold wallets” when it comes to blockchain transactions that are encrypted and plugged in but aren’t connected to the internet, so there’s little, as compared to other types, the danger of a cyberattack like in the case with hot wallets.
Common types are Paper wallets (as the name suggests, Private and Public keys are mentioned on a paper and can be accessed with the help of QR scans) and Hardware Wallets, i.e., secure hardware acting as a repository of private keys.
2: Avoid Public Wi-Fi
Want to keep your finances in order while trading or making crypto transactions? Make sure you’re using a secure internet connection and, if possible, avoid public Wi-Fi. Add a VPN, and you get additional security. A VPN camouflages your IP address and location so that no one knows where you are. This protects you from online threats and hackers, but it can also allow you to do things like access region-locked content.
3: Diversify investments in multiple wallets
A cryptocurrency wallet is like a drawer. These are small containers that allow private individuals to store their valuable crypto keys – the information that allows them to make transactions with cryptocurrency. And because the risks in crypto are aplenty, you mustn’t leave your crypto portfolio unprotected. Using multiple cryptocurrency wallets is one way to help keep control of your crypto life where you can strike a balance between wallets for crypto holdings and keep data breaches at bay.
4: 2FA/MFA for password security
Despite being easy and convenient to use, Infosec space no longer approves of using text messages alone as digital security. Their inherent design flaws, including vulnerabilities such as SIM swapping, spoofing SMS / aggregator numbers, and phishing attacks, make them poor options for safeguarding digital assets.
So if you’re thinking about investing in some cryptocurrencies, you’ll want to do so through a cryptocurrency exchange that offers two-factor authentication to ensure your money is safe.
2-factor authentication (sometimes abbreviated as 2FA) is one of the safest ways to secure your password. It is an access-control mechanism that requires two different methods of identification or authentication:
· the first being something you know (such as a PIN), and
· the second is something you have (like your phone, which sends a text message to verify it’s you).
5: Go Slow With Investments
Keeping a good mixture of small and large amounts of cryptocurrency in different wallets is wise. Don’t keep all your digital coins in one place. Protect your digital currency from potential threats such as hackers.
6: Backup Information
Losing your crypto account’s private keys could permanently lose cryptocurrency to the extent that recovery may not be possible. Therefore, it is crucial to store backup copies of your primary wallet’s private keys, which prove that your account belongs to you and is needed to recover its access.
Crypto wallet security is tricky to tackle, with multiple weak spots and areas of concern. There are two main issues: the first relates to access to local storage, where malware can easily steal your private keys. Another is lack of authentication, which means that in some cases, viruses and other malicious software can affect data being accessed (alongside potential access via unsecured mobile devices). In addition, there is a lack of input validation, meaning that users can inadvertently change permissions and grant functions on their devices when using crypto wallet software.