Skip to content

Ways to Keep Your Cryptocurrency Safe

The digital world of cryptocurrency is one of its distinguishing features. Cryptocurrency, unlike most other types of money, does not have a physical form. It is not available in the form of paper, coin, or gold bar. There is no need to store the token in a bank vault.

However, cryptocurrency, like any other valuable asset, must be safeguarded. It operates as a fully digital entity that requires an internet connection to conduct any transaction, making it vulnerable to hacking. In fact, it’s just as vulnerable to theft as cash or gold, despite its ethereal nature. And, with cryptocurrencies, these crimes are more likely to occur via the internet.

Cryptocurrency Account Hacking Is on the Rise

While the crypto industry continues to expand every day, larger volumes of crypto require greater responsibility and, as a result, improved security for both users and bitcoin exchanges will benefit. If bitcoin security does not improve, new users will be afraid to use cryptocurrencies, which will prevent its mainstream adoption. Almost every week, there is news about a data breach or a bitcoin exchange hack.

In 2021, the number of cases of bitcoin hacking and fraud broke records. According to 2021 surveys, the market’s value has risen to more than $2 trillion, matching the market’s expansion.

how to keep your cryptocurrency safe

Wallet and exchange breaches are the most common sort of assault, accounting for 126 in the previous ten years, outnumbering attacks and fraud involving DeFi, or decentralized finance, which account for 41 each. However, as this new technology becomes more vulnerable to potential flaws, the number of DeFi breaches is on the rise.

Breach and fraud have resulted in the theft of $19.2 billion in the last ten years. Bitcoin is the most commonly hacked and fraudulent cryptocurrency, accounting for 33.3% of all occurrences. Following a selloff, bitcoin, the world’s most traded digital asset, was re-approached $1 trillion.

According to CoinMarketCap.com, Bitcoin accounts for around 43% of the cryptocurrency industry, which grew in value to $2.1 trillion in 2021.

Ethereum is the second-most-targeted cryptocurrency, with 36 breaches (12.8%) over the last decade.

Fraud cases, however, are the most attractive for thieves, according to Crypto Head, since they have taken an average of $365 million, or more than 14 times as much as breaches.

With 17 hacks and fraud instances, the United States is the most frequently attacked country, followed by the United Kingdom and South Korea, with 12 and 9 incidents, respectively.

Although 2021 established a new peak for the number of violations, hackers made the most money in 2017, stealing an average of $223.5 million and a total of $4.7 billion.

According to Crypto Head, Mt. Gox had the largest hack to date, with $615 million taken over the years, resulting in the platform’s insolvency in 2014.

How to Keep Your Cryptocurrency Safe

Kinds of Cryptocurrency Wallets

Hot Wallets

The term “hot wallet” refers to an online wallet that can be accessed from any internet-connected device, such as a smartphone or a computer. This method is a highly easy way to store cryptocurrencies, especially if users conduct all of their transactions online. These wallets, on the other hand, are designed to store or use a small amount of cryptocurrency. Web, desktop, and mobile wallets are examples of hot wallets.

how to protect cryptocurrency

Although it is simple and convenient to use, there is a risk associated with it. Because it is an online approach, there is a risk that users will lose their currency. This can occur throughout exchanges. You can also use exchange wallets, which are a type of custodial account provided by the exchange. Because this wallet does not store private keys, users should never keep their cryptocurrencies on an exchange. It is best to avoid it because it is a third-party wallet.

Cold Wallets

A cold wallet, often known as an offline wallet, is another type of cryptocurrency wallet. This is probably the safest option to keep cryptocurrency because it is not connected to the internet through any device. As a result, there are far fewer chances of getting robbed. Because the private key and the address aren’t connected to the internet, this is the case. This usually features specifically created software that lets users access and alter their information without putting their private key at risk.

Cryptocurrency can be stored in a variety of ways and with a variety of possibilities. It is up to you to choose the type of tool you want to use based on your preferences and security requirements.

Basics of Keeping Cryptocurrencies Safe

Two-Factor Authentication

Because of security concerns, two-factor authentication is essential. Some exchanges employ three or more criteria, rather than just two. Until they’re cracked, passwords are impenetrable. It could be due to a user’s inexperience in creating a weak password or using the same password on many accounts. Hackers frequently utilize tactics like keylogging or sending out malware that installs malicious code on computers because they have