Safest Way to Store Crypto. Cryptocurrency Wallet Security Tips

Despite the cryptographic approach to securing all types of digital wallets, there are various risks associated with using them, including cyber attacks, phishing attempts, and misuse, among other issues. Although, following the best crypto wallet protection tips can help to mitigate the majority of risks.

In this article, we review the main crypto wallet scams and make another dive into methods of securing digital storage.  

Crypto Wallet Security Priority

A cryptocurrency wallet is a tool that helps you store and manage various digital assets. It represents software or an actual device that allows users to access funds kept on the blockchain and perform operations.

The most common classification of crypto wallets differentiates hot and cold storage. These two classes of digital wallets are diversified by their level of exposure to the internet connection. Hot wallets are easily accessible through websites and applications due to their constant connection to the internet. Conversely, cold wallets are kept offline most of the time, which enhances their cyber security.

Top Crypto Wallet Security Risks and How to Avoid Them

Hacking

As cryptocurrency usage grows in popularity, so do hacking activities. According to the Chanalysis report on crypto security, around $4 billion in funds got leaked into hackers' hands in 2022. Cybercriminals are extremely inventive when it comes to draining your funds by spreading malicious software.

• Use reputable software and hardware, retrieved exclusively from official websites;
• Secure your internet connection: avoid using public Wi-Fi for crypto operations by any means, try VPN as an additional security measure, and make sure to keep the firewall updated;
• Dodge suspicious links (especially shared by random people, “Elon Musk,” or any other phony high-profile account);
• Double-check website URLs to confirm it’s not a clone page imitating popular platforms.

Source: Chainalysis

Phishing Attacks

You are probably receiving tons of emails and DMs with shady texts promising huge crypto returns. Some go as far as asking for your private keys, seed phrases, and credentials for whatever reason.

• Always verify the sender. Whilst the email address may seem legit, keep in mind that even reputable services would never ask for this data;
• Avoid sharing any sensitive data at all online;
• Beware of impersonators: check the username and always leave room for a chance that the real account may be hijacked for promoting illicit crypto initiatives.

Source: @cb_doge via Twitter

Crypto exchanges misuse

Choosing to keep funds on cryptocurrency exchanges –  examples of custodial storage, wallets controlled by a third party – may be convenient. Storage provided by the exchange generally has a wide range of functions, quick and easy access, and password-restore options.

In this case, unlike non-custodial wallets, private keys and seed phrases are stored and owned by the service; making the risk of hacks, sanctions, and restrictions very real.

• Keeping long-term holdings off crypto exchanges may be a good idea. Only non-custodial tools give full control over users’ assets while retaining high anonymity and security properties.

Personal responsibility failure

Hacking the blockchain itself is much harder to implement than bringing the Ocean's Eleven movie plans to reality. Hence, human mistake remains the most crucial factor in the failing security of crypto storage. Weak passwords or crypto sent to the wrong address or chain will result in loss without any third-party involvement or eventually facilitate hacker intervention. This section is worth separate attention, so we’ll further list some of the best practices for managing your crypto wallet safely. 

Ultimate Practices for Cryptocurrency Wallet Security

• Handle credentials properly

A strong password is at the front line of your wallet’s safety. Make sure it is unique, exclusive to this app, and difficult to crack. Keeping it online may not be the best way to store crypto credentials.

Source: Hivesystems.io

• Enable additional layers of protection

Make it much harder for hackers to access crypto in your wallet by adding Two-Factor Authentication (2FA) to your app and enabling login with biometrics where possible. Additional hassle is well worth it!

• Devise a recovery plan

Have recovery steps prepared in case you forget or misplace your crypto storage credentials. Additionally, timely app updates will keep the wallet’s security system effective.

Conclusion

Ultimately, awareness is the best bet when dealing with digital wallets and any activities related to crypto. This implies comprehending the risks associated with the space, adopting best practices, and keeping up with the latest hacker tricks crypto users may fall into. Stay informed and safe!