Crypto Wallet Security EssentialsNov 29, 2022
Your cryptocurrency is as secure as your wallet is protected. The safety of a crypto wallet is the first thing to learn for newcomers to the space. Even if you're an experienced crypto enthusiast, the topic needs revisiting once in a while.
So today, let's talk about:
✅ Careful Choice of Wallets
✅ Wallet Security Tips
✅ Personal Responsibility
✅ How Arctic Wallet Secures Your Assets
How Crypto Wallets Get Hacked
An open-source policy that the decentralized world supports plays a bad joke on safety: attackers study wallet codes for vulnerabilities and abuse them before those get patched. Hackers are particularly inventive when it comes to crypto-related schemes. Here are the most common ways your storage can be drained.
⚠️ You can get emails/DMs seemingly from legitimate senders containing links. They may eventually lead to fake websites asking for your credentials or even seed phrases & private keys or spread malware right after you open the link. Such links always contain odd or missing symbols as compared to real URLs.
|Scammer spreading phishing link pretending to be Binance employee / Source: Binance.com|
⚠️ Sliding into your DM's asking too much personal info, offering "amazing investment opportunities" if you give them control over your funds.
⚠️ Hackers can infect your device with malware and gain control over your wallet and funds in many different ways: screen recording software, applications substituting copied wallet addresses to attacker's wallets, and so much more.
⚠️ Downloading wallet software from untrustworthy providers may lead to installing malware, or such programs may act as a standard wallet until you deposit funds and lose them forever.
⚠️ Should you lose your phone with an installed Wallet App or got robbed and lost your laptop, your crypto becomes an easy target.
Uncareful Transaction Signing
⚠️ MetaMask wallets have recently been compromised via the "setApprovalForAll" option. This function is integrated for communicating with smart contracts and NFT-related activities. The approval signed gives users with malicious intent the ability to move your funds without your further confirmation.
Similar may happen would you sign transactions on:
fake or replicated marketplace/project websites that look similar to well-known platforms but with a slight difference, e.g. open.sea.com when it's opensea.io;
scam-project and random & generous Airdrop pages;
even official socials of any legitimate project that got hacked.
How Arctic Wallet Secures Your Assets
Privacy of the crypto wallet should be the primary concern for any wallet developer. Arctic's approach to risk mitigation includes all the possible ways to protect your crypto holdings and related operations.
✔️ No Private Data is Shared
When creating the new Arctic wallet, you are asked to fill in two fields: a strong password and the secret phrase to confirm it. No emails, KYCs, or phone verifications.
|Source: Arctic Wallet|
✔️ The Wallet is secured by a Seed Phrase
Security of the seed phrase is a key component of best crypto storage practices. A 12-word secret phrase is randomly generated every time you create a new wallet. It's also necessary to change any settings inside the app. You can access your funds from any device using these 12 words and your password.
|Source: Arctic Wallet|
You can reveal the secret phrase in "Settings" by submitting the password. Hence, your password and secret phrase should be properly secured.
✔️ Proper Private Key Management
Arctic is a decentralized non-custodial wallet, meaning no middlemen are included in your interaction with the wallet. You get full custody of your funds and full ownership of your wallet's private key.
Private Key and Public Key are created for any non-custodial wallet. While your Public Key can be shared as it is similar to a bank card identification number, the Private Key is used to access funds and process transactions, so it should never be revealed to anyone.
✔️ Data Safety
All the data required to run the app and your private keys are stored on your device only and never shared with the wallet issuer. Arctic provides an interface for you to connect to the blockchain and makes your interaction with it safe and easy.
✔️ Address Book Feature
With an in-built address book, there is no need to copy repeatedly used addresses. It helps to avoid address substitutes and mistakes that may result in sending crypto to the wrong addresses.
✔️ In-App Operations
With Arctic, there's no need to connect to other websites/protocols, as you do not leave the app to exchange and buy crypto. Plus, exchanges in Arctic wallet are service fee-free ‒ as for any transaction on the blockchain, only a network fee is charged.
🔜 Soon, Arctic will get the Staking feature, shielded transactions for extra protection, NFT tools, and Decentralized Applications integrations.
The wallet is perfect for beginners for its uncomplicated User Interface and gradually added features so that users new to crypto may learn more about the blockchain world as new functions appear.
Best Crypto Wallet Security Practices
Having a reliable wallet is not yet enough to stay safe in the Web3 space. Let's break down some best personal responsibility practices to have a secure blockchain journey.
👉 Be extremely careful with URLs. Don't click links from random senders. Visiting any crypto-related web page, make sure the address is accurate. Consult CoinMarketCap for official links. Check if the URL address starts with "https://" where "s" shows a secure socket layer deployment.
👉 Avoid storing your crypto on Exchanges, as it's a primary target for hackers. If you are a long-term holder (and this is how you get the most returns in crypto), you must have full custody over funds that only non-custodial wallets provide.
👉 Having a wallet installed on your phone may not be the safest way. If you lose your phone, you'll lose your wallet.
👉 Be particularly selective when connecting your wallet to any third-party provider (for swapping, gaming, minting NFTs, or signing any transaction). For extreme security, consider using separate wallets to communicate with apps and store long-term holdings.
👉 Install trusted Antivirus Software and update it in time. You can even use VPN services for extra protection. Needless to say that downloading files from suspicious resources is dangerous as hell.
👉 Stay Informed on latest schemes hackers may use to approach your funds.
Extreme Measures for Security Paranoids (not without a reason)
🛡 Have a dedicated PC for dealing with crypto to eliminate potential online threats.
🛡 Consider having a hardware (cold) wallet to store large sums of crypto.
However secure Web3 wallets may be, it's only in the holder's power to protect hard-earned crypto capital. Learning crypto is simple, but storing assets securely demands a healthy dose of skepticism toward any part of it. Use non-custodial wallets, research their security degree, always be on alert and consider every step as a potential risk.