Cryptocurrencies are in the spotlight today, not only for investors and Internet users. Cryptocurrency holders should be concerned about cybercriminals who intend to get their hands on someone’s crypto wallets. They are getting creative when developing their fraud schemes, and it can be challenging for users to spot security threats, that only the best crypto audit companies can detect. So, we decided to dig into the most useful and effective way to protect your crypto wallet from getting hacked or stolen.
Further in this article, you will discover numerous recommendations and tools that will significantly help you secure your digital wallets.
What Is Cryptocurrency Wallet?
A crypto wallet might be software or hardware that facilitates storage for your crypto funds. It allows you to manipulate your currency the way you want: send, receive, browse your funds, and even interact with blockchain features. And, of course, having cryptocurrency requires you to own a crypto wallet.
There are two distinct types of crypto wallets – hot wallets and cold wallets.
A software wallet (usually called a hot wallet) is the most typical digital wallet that works via an Internet connection and can be accessed from various devices. Hot wallets are very convenient as you have quick and easy access to them, and you can conduct transactions in seconds.
Regardless of their convenience, they have a lot of vulnerabilities, the same as other programs connected to the Internet. Cybercriminals will try to exploit the weaknesses of the software to gain access to your private keys and steal funds from your account. But there is a thing called a non-custodial wallet. It works like a regular hot wallet without giving service providers your private key. Thus, it offers better safety overall.
Many hardware wallets (often called cold wallets) appear to be a much safer option than hot wallets. Their main benefit is that they are not connected to the Internet, which naturally excludes possible vulnerabilities. They are basically out of reach from viruses and cyber-attacks. A hardware wallet utilizes devices like USB or other material tools that can store digital currencies.
Cold storage can also be represented as paper wallets. They are usually just paper prints with a QR code that contains your funds. You can transfer crypto from paper wallets into software by scanning a code.
But don’t be deceived by the fact that it is an offline wallet. Multiple hardware wallets can perform online payments and even support a few cryptocurrencies at once.
Remember that it is vital to buy hardware wallets solely from a manufacturer. Every prominent crypto developer should have a personal hardware wallet that offers a safe place for storing digital assets. Don’t ever try to buy a cold wallet from a third-person – it might be a fraud scheme to steal your crypto assets.
Best Ways to Safeguard Your Cryptocurrency Wallets
Knowing what types of wallets exist, we can take a look at methods and tools to keep your crypto wallet safe. Although there are many sophisticated techniques aimed at stealing your funds, we are sure that those security measures will prevent many of them from happening. So, let’s take a look at those methods and understand how to apply them.
Choose a crypto wallet that suits you best
There are so many different options for storing digital currency, and you have a big room to choose from. They are very different and can fit diverse tasks. For example, let’s say that you aren’t planning to do any cryptocurrency exchanges and store crypto funds like Bitcoin safely. Thus, your obvious choice should be a cold wallet. But if you plan to conduct constant manipulations with your crypto, you should choose software storage. Yes, it is less secure, but it will not be a problem if you follow our upcoming advice.
Utilize 2FA (Two Factor Authentication)
Two-factor authentication (2FA) applies an additional security layer to your cryptocurrency wallet. If somebody tries to withdraw money from your account, they will be asked to verify their action by typing in a unique code or seed phrase that you will receive. This leaves a criminal without the opportunity of stealing funds if there is no access to your mobile phone or other devices.
Enable a multi-signature feature
Multi-signature is a crucial feature utilized by proficient crypto investors to reduce the risk of losing crypto assets. This tool implements into your wallet a system that will require a few signatures to enter a wallet to perform a transaction. With this feature, a fraudster will not be able to gain access to your wallet without having those signatures, which is very hard.
Use a secure Internet connection
This safety measure does not utilize any additional security tools. However, it is not less effective. By secure Internet, we mean connecting only to your personal Wi-Fi or another trusted network. Avoid using public WiFi as it can be a starting point for cybercriminals to perform hacking. An excellent way to protect your connection and keep your browsing and IP address safe is to use a VPN.
Use multiple wallets and regularly change their passwords
It will be a great idea to use a few mobile wallets to store bitcoin or another crypto. Two wallets mean that a fraudster will need to work twice as much to get your private keys. Instead, you can use one wallet as a savings account to store funds and the second for transactions.
But don’t forget to change the login details of your wallets. Hacking your wallet would be very tough if you came up with a strong password. But if you want to bring your wallet’s security to another level, you should constantly change passwords. However, avoid coming up with the same password or something similar to previous ones.
Back up your wallet
Regular backups will protect your digital funds from data corruption that has a chance to occur in any system. Data corruption may threaten your bitcoin wallet security, and if you lose important files, your funds can become worthless. You should store backup files on reliable drives like USB.
Update your software
Software updates are the essential part of owning a crypto wallet. By software, we mean every piece, including the operating system, antimalware programs, and the wallet app itself. The software program needs to be regularly updated as software developers constantly provide new security fixes. This method can be a defining factor that will protect your entire wallet.
Keep your private keys secret
You better not share your private keys with anyone as they may get into the fraudster’s hands. Don’t use software like notepad to keep your private key there. The best option would be to write them down on a physical object like a piece of paper. Nobody will ever ask you to give away your private key, so don’t be deceived by phishing emails.
Cryptocurrency wallets are classified into different types of storages. Most of them have their pros and cons. While some are more suitable for just storing funds, others offer more for conducting transactions. And when it comes to their security, they are different.
Cybercriminals are discovering new sophisticated ways to steal your crypto, but you should already know many ways to protect your wallet. So, make sure that you follow this guide and keep your private key secret!
Frequently Asked Questions
A Crypto wallet is a digital wallet that is made to keep cryptocurrency.
There are two main types of crypto wallets – software and hardware wallets.
Hardware wallets are very safe, as they are basically immune to any hacker attacks or data breaches.
To protect your crypto wallet you need to keep your software up to date and enable two-factor authentification, and multi-signature features.