When investing in cryptocurrency, it’s essential to be aware of these risks and take steps to mitigate them. For example, only invest what you can afford to lose, avoid keeping all your coins in one place, and diversify your investments. By taking these precautions, you can help ensure that your experience with cryptocurrency is a positive one.
This article will run through some of the best ways to stay safe while using cryptocurrency.
Is Cryptocurrency Secure?
Yes. And no.
Blockchain, the underlying cryptocurrency technology, makes cryptocurrency inherently secure. Blockchain is a decentralized public ledger platform that uses cryptographic techniques to ensure that data is tamper-proof and immutable.
Once data has been added to the blockchain, it cannot be altered or deleted by anyone – even the network administrators making it an ideal platform for storing sensitive information. Additionally, all data on a blockchain is encrypted, which makes it very difficult for hackers to access. Even if they can penetrate the network, they would not be able to change the data without the cryptographic keys. Overall, blockchain is a very secure platform that offers high protection for its users.
However, investors and exchanges are still vulnerable to hacks, fraud, and scams. For example, in 2021, Poly Network was hacked and lost $611M, and even more recently, Ronin Network lost >$625M in March this year (2022).
Many investors fall victim to scams, and you should always try to do as much as possible to avoid scam projects.
Cryptocurrency Security Standards
Cryptocurrency has not faced many controls since its birth. However, more recently, with the increase in adoption, there is more requirement for a security framework. The three primary categories will identify and mitigate risks (control-based), resolve context-specific issues that arise from the control-based framework (risk-based), or individual frameworks specific to your model (program-based).
Program-based frameworks are much less common in the cryptocurrency world and cybersecurity.
The CCSS compliance (or CryptoCurrency Security Standard), maintained by C4 (Crypto Consortium), “is a set of requirements for all information systems that make use of cryptocurrencies, including exchanges, web applications, and cryptocurrency storage solutions.”
“By standardizing the techniques and methodologies used by systems around the globe, end-users will be able to easily make educated decisions about which products and services to use and with which companies they wish to align.” – Taken from the depreciated CCSS GitHub repository.
Types of Attacks in Cryptocurrency
While there are many types of attacks that can (and sometimes do) affect the operation of blockchains, such as the code exploits of Poly Network or Ronin Network, the average user doesn’t need to worry about them too much. That is because most times, people are reimbursed, but not always.
(There are many others, such as the 51%, BGP Hijack, DNS Hijack, Eclipse Attack, etc.)
However, there are attacks that everyone needs to look out for:
- Opportunistic attacks. – These are malware distributed in mass where anyone can download them or connect to them through websites (often fake copies of well-known websites).
- Dedicated attacks. – There are many types of dedicated attacks that you need to look out for. For example, people will spearhead or pretext their potential victims where they make plausible stories to gain money or information. Other dedicated attacks are cloning websites but with different payment connections and even social media channels to go with them.
One common tactic is to pretend to be a person higher than you in a business and request that you complete an action for them or that they need money urgently (CEO fraud). Another is to pretend to be an admin of a group, offering to help you with any issue you have shared in public and asking for sensitive information.
Remember, project owners will NEVER PM YOU FIRST.
How to Protect Your Crypto Investments?
It’s essential to take steps to protect your investment. One of the most important things you can use is a reputable exchange that offers security features like Two-Factor Authentication (2FA) or higher.
It would be best to store your cryptocurrencies in a wallet that provides security and ease of use; although the ease of use does come second here, always keep your private key secure, stored offline in a safe location. By taking these simple precautions, you can help to ensure that your crypto investments are well protected.
Research the Cryptocurrency that you want to Invest in
Not all cryptocurrencies are created equal, and some may be more volatile or risky than others. By researching a cryptocurrency before you invest, you can help protect your investment from potential losses. In addition, it is also essential to keep up with the latest news and updates about the cryptocurrency market. By doing so, you can make sure that you are aware of any changes or new developments that could impact the value of your investment.
Only Buy and Sell Through Trusted Exchanges
With the rise in popularity of cryptocurrencies as a way to invest and trade online, it’s important to remember that they are still a relatively new and unregulated market. Unfortunately, many unscrupulous operators are looking to take advantage of unsuspecting investors.
If you’re thinking about buying or selling cryptocurrency, it’s crucial that you only use trusted exchanges. Many scams are masquerading as exchanges, and if you’re not careful, you could quickly lose your money. So do your research before choosing an exchange, and only use exchanges with a good reputation.
Crypto Wallets: Store your Cryptocurrency Safely
As cryptocurrencies are stored digitally, they are susceptible to hacking and fraud. As a result, it is essential to ensure that your cryptocurrency is stored safely.
Here are some basic steps that you can take to reduce the risk of losing your crypto:
Always Use Advanced Authentication Mechanisms
One way to ensure safety is to use a wallet that offers two-factor authentication or higher. That means that even if someone manages to obtain your login details, they will not be able to get to your funds or create transactions without also having your phone or another second factor.
Some wallets and exchanges (such as Binance) have the option for 5FA:
- Email and password
- Anti-bot verification
- Text message code
- Email code
- Authenticator app
And if you want, you can use them all every time you log in or use biometrics (fingerprint scanner, facial recognition) on your devices.
Use a Strong Password
Using a strong password should be self-evident. However, unfortunately, not everyone is attentive to passwords as we would like.
Why use blockchain technology and cryptography if we use passwords such as Password1?
Some tips on creating and storing passwords are:
- NEVER use Your name, family names, pets, birthdays, etc.
- NEVER use simple passwords, 123456, qwerty, letmein, etc.
- NEVER use the same password twice.
- ALWAYS use sp£c1al Char@cters and CAP$ in the p@$$w0rd
- ALWAYS use a manager if you have many passwords to remember.
Remember, there are many ways that a password can work for you, be easy to remember, and keep you safe.
Use Trustworthy Wallets
When you are storing your cryptocurrency, there are a few types you have to choose from. However, the primary decisions are between a cold or hot wallet, both based on private keys that you MUST KEEP SAFE.
- Hot wallet. – Continually connected to the internet
- Cold wallet. – Not connected to the internet
Whatever type of wallet you choose, always use a trusted provider with a good background in security and accessibility.
Use a Cold Wallet if Possible
Unlike hot wallets, cold wallets are not connected to the internet. As a result, cold wallets, such as Ledger, are always one of the safest options for storing your digital assets.
Maintain Multiple Wallets
You should ask yourself is; would I carry all of my cash around with me in one bag? The answer should be no. The same thing applies when we are talking about cryptocurrency wallets.
When you store your cryptocurrency in a wallet, you are essentially holding a private key (a string of numbers and letters) that gives you access to your currency. If someone were to get their hands on your key, they could take your money. That is why it’s essential to keep your keys safe and never store them in crypto exchanges.
Whether you are using cold wallets or hot wallets, it is always best practice to keep your cryptocurrency spread over multiple wallets to ensure safety in case you fall victim to hacks or theft.
Private keys – The Most Important Thing
Private keys are the only thing that stands between a hacker and your cryptocurrency account. That’s why it’s essential to keep them safe and protected.
The best way to do this is to store them offline in what’s known as a “cold storage” wallet. That could be a physical device, like a USB drive or a piece of paper that you’ve stored in a secure location.
The important thing is that your private keys are not accessible by anyone but you. That means no storing them on your computer or taking screenshots of them. Do not print them, either, and if you still decide to print them out, make sure your printer is not connected to the internet, as even printers can be hacked.
Keep Check of Your Virtual Currency Transactions
As with any other financial institution you use, one part of all critical actions you should add to your process is checking your daily transactions for any transaction you have not authorized.
There are many ways in which you may receive tokens that can create
Don’t Show off your Cryptocurrency Transactions or Holdings
If you publicly show off your crypto wealth, you invite criminals to target you. Hackers have been known to break into people’s accounts and steal their funds, so it’s essential to keep your information private.
Some scammers will try to trick you out of your funds, so it’s essential to be careful who you trust. However, you can help keep your cryptocurrencies safe and secure by taking simple precautions.
Secure Your Personal Devices
Our personal devices play a vital role in our everyday lives in today’s world. From keeping us connected to our loved ones to helping us stay organized and productive, and, of course, using cryptocurrency, these devices have become an essential part of who we are. However, as convenient as they may be, personal devices can pose a severe security risk if they are not adequately secured.
Hackers can use them to gain your personal information, leading to identity theft and financial fraud. Additionally, malicious people can use unsecured devices to spread malware and viruses, putting our entire online world at risk. To protect ourselves and our families, we must always keep our personal devices secure. Fortunately, we can all take a few simple steps to help safeguard our devices, such as installing security software and keeping our operating systems up-to-date, and even harddrive encryption.
Use Secured Internet
The internet has made our lives easier in so many ways. We can work from home, stay in touch with distant friends and family, and even conduct financial transactions online.
However, it’s important to remember that the internet is not a secure place. Hackers can quickly obtain your personal information if you’re not careful.
That’s why it’s essential to take precautions when conducting any financial activities online. For example, only use secure websites that encrypt your information (fake websites are getting harder to detect) and never provide your personal information to anyone online. By taking these simple steps, you can help protect yourself from identity theft and other cybercrimes.
Never connect to unsecured or unknown WiFi, as you can not tell if there is anyone or anything connected to it that can cause harm!
Crypto Security – Use Antivirus and Antispyware Software
Always, always have good Antivirus and Antispyware software installed on your devices. A subscription to a reputable company is always going to cost less than having your information and currency stolen through viruses.
Do not Open Spam and Phishing Emails
This point should not need mentioning, but we will. Email addresses are straightforward for hackers to get hold of. Whether through a data leak from an email subscription you signed up for or a code generating random emails with words and names followed by @gmail.com, you are likely to get many opportunistic people trying to scam you.
Never open the emails; they are never good. Most email providers are good at weeding out the spam and putting it straight into a junk folder that auto deletes. However, there are times when some slip through.
If you accidentally find yourself with an open spam email, DO NOT CLICK on links.
Crypto Security: Beware of Sim Swapping
Sim swapping is a type of fraud that allows someone to take over your phone number and associated accounts. Sometimes, they can call your service provider and pretend to be you. Once the fraudster has taken over your phone number, they can then use it to reset the passwords on your online accounts and gain access to sensitive information.
They can also use it to send text messages or make phone calls in your name. Sim swapping is a severe threat to your online security, so it’s essential to be aware of it and take steps to protect yourself. One way to do this is to set up two-factor authentication on your accounts. That will require you to enter a code from your phone and your password, making it much harder for someone to gain access to your account if they manage to steal your phone number.
Most mobile service providers have security measures to combat SIM swapping, but it is still something that you should be aware of.
How to Avoid Crypto Project Scams by Spotting them Early
It’s no secret that the cryptocurrency industry is rife with scams. From fake ICOs to Ponzi schemes, there are plenty of ways for someone to take advantage of unsuspecting investors. But the good news is that there are also plenty of ways to spot a crypto scam before it’s too late. Here are a few red flags to watch out for:
- Promises of guaranteed or unrealistic returns: If a project promises guaranteed returns or returns that seem too good to be true, it’s probably a scam. Always do your own research and be aware of the risks involved in any investment.
- Lack of transparency: A legitimate project should be open and transparent about its team, roadmap, and plans. If a project is secretive or evasive, that’s a red flag.
- Pressure to invest quickly: Scammers will often try to pressure people into investing before they have a chance to do their research. Be wary of anyone who tries to rush you into an investment decision.
By being aware of these common red flags, you can help protect yourself from becoming the victim of a crypto scam.
For more information, read: How to Avoid Crypto Project Scams.
Stay Safe in Telegram
Telegram is one of the most common social networking platforms for cryptocurrency projects because it is easy for many people to use and is a global application that allows vast numbers of users in one channel. However, the popularity of crypto teams has also brought popularity for scams and fraud.
Keep your wits about you on all social media apps, ask questions in the public chats (after finding the legitimate Telegram URL), and never even entertain people claiming to be admin or support if they message you first.
Conclusion – Steps to Prevent Your Cryptocurrency from Cyber Attacks
As the cryptocurrency industry and technology continue to grow, so does the risk of cyberattacks. Cryptocurrencies are a valuable target for hackers because they can steal funds and leave little information about who they are. However, there are several steps that you can take to protect your cryptocurrencies from cyber attacks:
- Make sure that your computer is protected with antivirus software and a firewall.
- Keep your software up to date.
- Don’t click on links or open attachments from unknown sources.
- Don’t reveal personal information online.
- Use strong passwords and don’t reuse them.
- NEVER SHARE YOUR PRIVATE KEY!
You can help protect your crypto from cyberattacks – personal security is your priority.
How Secure is Crypto?
Crypto is only as secure as the measures you implement. However, if you take advantage of the enhanced levels of security that blockchain offers and the tools provided for blockchain, it is safer than many other financial institutions.
What is the Best Crypto Security?
The two best security devices are in the form of cold wallets; Ledger and Trezor.
Can Cryptocurrency be Hacked?
Yes, but blockchain hacks are relatively rare, and personal hacks are often preventable; you must use the tools and processes available to mitigate future risks.