Hackers and scammers steal billions of dollars in cryptocurrency every year. Cryptocurrency safety is essential to learn and is even more critical today than when Bitcoin was first introduced in 2009. Continue reading to discover the best expert tips beginners should implement immediately to keep their cryptocurrency safe.
Cryptocurrency safety requires taking a proactive approach to protecting your digital funds. Basic safety precautions, cold wallets vs. hot wallets, spreading risk, avoiding scam coins, and other types of scams are all essential to learn about when discussing cryptocurrency safety. Using all of these together in one master plan will make it incredibly difficult for hackers and scammers to steal your hard-earned digital assets.
Basic Safety
The saying, “knowledge is power,” is truly relevant when it comes to cryptocurrency (crypto) safety. The methods hackers use are constantly evolving, so continuing to stay updated on the most recent trends hackers are utilizing is essential. Some other helpful tips to consider implementing include:
- Routinely change passwords. Security experts suggest changing passwords every three months using a combination of alphabetical characters (upper and lower case), numerical characters, and symbols. The password should be at least eight characters long and should not be a word found in a dictionary. Lastly, ensure the password is not associated with any personal information.
- Use multi-factor authentication (MFA). Multi-factor authentication is using two or more methods to verify one’s identity. Using MFA can reduce successful attacks more than 90% of the time. MFA falls into three categories:
- Something the user has – Smart card, Security Token
- Something the user knows – Pin, Password
- Something the user is – (Biometric) Fingerprint, Face, Voice
- Verify all websites and applications (apps). Ensure the cryptocurrency websites and apps being used are legitimate and secured. Many hackers often create fake websites and apps. Unsuspecting victims provide their personal information which can then be used against them. One recent case in 2022 involved scammers creating a fake NFT website that looked identical to the actual website. Visitors were tricked into giving the scammers over six million dollars in NFTs.
- Device Security. Avoid using any public devices when conducting financial transactions due to the possibility of malware previously being placed into that device. When using your personal device, ensure it is up to date with the latest anti-virus software. You should also ensure a firewall is installed on your device. For even more protection, consider using a Virtual Private Network (VPN), which keeps your browsing activity safe and private by changing your IP address and location.
- Internet Security. Always avoid any financial activity when using public wifi networks. Hackers have several ways to steal your identity, and your crypto, through the use of these public networks. Periodically check on the security of your wifi and websites to ensure their protections are up-to-date.
Cold Wallets vs. Hot Wallets
Cryptocurrency wallets are an excellent way to keep your digital assets safe. They are used to store, send, receive, and spend digital money. These wallets can be a physical device, an app, or a service.
A cold wallet is a wallet that is usually not connected to the internet, making it much more secure against cyber attacks. Storing your funds offline on a physical device dramatically reduces the possibility of theft. Some downsides of cold wallets include the possibility of physically losing the device and the amount of time it takes to make transactions. It is not the most convenient option if transactions occur often.
A hot wallet is always connected to the internet, making it much faster and easier to use than a cold wallet. Hot wallets are a low-cost option, with many available free through exchanges or apps. Unfortunately, the need for an internet connection is also why hot wallets are vulnerable to cyber-attacks and theft. Another downside is you can permanently lose everything in your hot wallet if your funds are not insured and the exchange or app holding your hot wallet is permanently shut down or hacked.
Spreading Risks
There are several options to store cryptocurrency. Some possibilities include exchanges, brokerages, and wallets. Whatever option you choose to store your crypto, it is always recommended to spread your risk by keeping your assets in more than one location. This can mean using a combination of the options mentioned here. You may even choose to use multiple wallets to spread the risk out. Keeping portions of your digital assets in more than one location will ensure you won’t lose all your funds.
Avoiding Scam Coins
A scam coin is a cryptocurrency created to steal money from people who supported and invested in the currency. They are often referred to as “get rich quick schemes” and are a major issue in cryptocurrency. The best way to avoid these cryptocurrency coins is to know what to look for when searching for a good coin. Some things to look for in good coins include:
- Does the coin have a white paper explaining its use case and fundamentals? Every legitimate cryptocurrency should have a white paper on its website.
- Does the tokenomics make sense? Tokenomics is essentially studying the token’s economic details. Tokenomics should include total token supply, market cap, token distribution, and token amounts controlled by individual investors.
- Does the coin have a good development team with years of experience?
- Was an audit performed on the coin? If so, did it pass the audit?
Other Types of Scams
There are several scams that are consistently used due to high success rates. The number of these scams is increasing every year and is continuously evolving. The Federal Trade Commission stated that cryptocurrency-related scams resulted in over eighty million dollars lost from October 2020 through March 31, 2021. Some of the most popular scams include:
- Fake websites with phishing pages created to steal sensitive information like usernames and passwords.
- Fake apps available for download from Google Play and the Apple App Store. These apps may monitor user activity, install malware, and steal personal information.
- Airdrop scams that require the user to give a lot of permissions to get the promised airdrop token. These permissions can result in the hacker gaining access to the assets stored in your wallet.
Conclusion
As technology improves, hackers and scammers will continue to create new schemes and opportunities targeting your digital assets. While this may possibly be alarming, avoiding the cryptocurrency market is not suggested due to the financial opportunities that come with investing in it. Life-changing wealth can be made in a fraction of the time it takes any other financial market to create. Applying the information in this article will help significantly secure your digital assets.
Now that you know expert tips about cryptocurrency safety, click here to learn more about cryptocurrency and why you should invest $50 a month.
*This article is only for informational purposes and not financial advice.
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