How to protect your bitcoins from Cyber robbers

How to
Protect Your
Bitcoins from
Cyber Robbers?

The global cryptocurrency market capitalisation stood at a whopping $356.44 billion in October 16, 2020. Bitcoin alone accounted for almost $210 billion of the total market cap, with Bitcoin Cash adding another $5 billion. The second most traded cryptocurrency, Ethereum, had a market cap of $42 billion, while Ripple and Litecoin contributed and additional $14 billion.

The birth of the crypto industry came in 2009 with Bitcoin but it wasn't until 2014 that it appeared on the radars of almost every trader and investor around the globe. People may not have started trading Bitcoin, but the chatter about its prospects had already begun. This is when Bitcoin prices entered the triple-digit range.

By 2017, Bitcoin started gaining acceptance as a medium of exchange for goods and services offered by leading companies. This was a phenomenal year for the cryptocurrency, as its price rose from triple figures to surpass the $1,000 mark in February. If that sounds amazing, here’s what happened over the coming month was jab-dropping. By mid-November that year, Bitcoin had skyrocketed to in excess of $10,000 per coin.

Cryptocurrency had arrived and the world wanted to know more about blockchain technology, cryptocurrency wallets and digital assets.

It didn't take long for a wave of startups as an array of altcoins (cryptocurrencies other than Bitcoin) emerged through initial coin offerings (ICOs). None are yet to deliver the same jaw-dropping surge in prices as Bitcoin, but their growth has been astounding when compared to other asset classes. Ethereum (ETH) climbed from less than $3 in 2016 to more than $300 in 2020. Litecoin also experienced a notable rise going from around $4 in 2013 to surpass the $40 mark in 2020.

With the value of these digital currencies escalating, the crypto marketplace became the focus of hackers and cyberattacks. Cyber robbers began prowling the ecosystem looking for vulnerable victims with scams and phishing attacks grabbing headlines. While cryptocurrencies offer amazing growth prospects, it is important for every trader and investor to know how to protect their Bitcoins and altcoins from being stolen.

How to Protect
Your Bitcoins from
Cyber Robbers?

The phenomenal growth of the cryptocurrency industry is unparalleled when compared to other asset classes. Over the course of less than a decade, we witness the price of Bitcoin risen from $1 to reach a peak of almost $20,000. This has not only attracted legitimate traders and investors from around the world, but also hackers and people with malicious intentions. This is not surprising given the value of Bitcoin and the potential growth offered by various cryptocurrencies. It has however increased the necessity for cybersecurity as hacker try to relieve larger entities of their crypto-assets.

Does this mean you should be discouraged...

Are people discouraged from buying their dream car due to a fear of being carjacked? Probably not.

What it does mean is that cryptocurrency investors must take preventative measures in order to protect their digital assets. To ensure the right security systems are in place, it is critical to understand the methods of exposure to cryptocurrency, and the options available in each of these methods to protect your coins from cyber thieves.

You can gain exposure to cryptocurrencies by:

1. Opening a digital wallet to store your cryptocurrency

2. Buying and selling cryptocurrencies on an exchange

3. Using crypto CFDs to trade different coins

Opening a
Digital Wallet

A digital wallet, or e-wallet, can be an electronic device or online service that allows you to
store currencies in a digital format. These wallets also facilitate electronic transactions, which have become a popular way of making a payment for goods and services purchased.

What are the Different Types of Digital Wallets?

Given the growing popularity of cryptocurrencies and rapid advancements in technology, new wallet designs are continuously being launched. There is not one specific Bitcoin wallet but rather a wide range of wallets that can be used to store cryptocurrencies. These wallets fall into one of two categories:

Hardware Devices (Cold Storage): These are physical wallets that look a lot like a USB drive. Your crypto coins are present on these devices and you can physically store them. Such wallets are commonly referred to as cold wallets or cold storage. Each hardware wallet has a unique key, known as a private key. This is essentially a unique code that works like a password to access the wallet. The code decrypts the lock on the wallet, allowing you to access the cryptocurrency stored in them. These are considered by experts as the most secure way to store Bitcoin or other crypto assets.

There are some issues with this method of securing your cryptos. You run the risk of losing the wallet or the password key. If that happens, you can never gain access to your precious coins. Also, some investors consider it tedious to store a digital currency offline in a physical format. After all, the advantage of digitalisation is that it is always accessible. Moreover, a device can get damaged or corrupted. When this happens, you may need professional help to retrieve your data. This can be both expensive and very stressful as there could be circumstances where some of the data is lost. There is no guarantee that the person will be successful in restoring all your data.

Online Wallets (Hot Wallets): These are similar to cold wallets, except that they do not have a physical form. They are also considered a secure way of storing your Bitcoins or other digital currency. Being cloud-based, this type of wallet is accessible from your computer, smartphone, or tablet. A virtual wallet lets you store your cryptocurrencies, access them from anywhere and conduct transactions. Beginners often find it easiest to open a virtual wallet as it can be set up quickly, is simple to understand and straightforward to use. Since they also work by using a private key, online wallets can become inaccessible if you lose the key. It is incredibly important to keep your private key in a safe location that you will remember.

Paper Wallets: These fall under the category of online wallets but deserve a mention. Paper wallets are web-based platforms that have advanced algorithms capable of creating Bitcoin addresses and private keys that can be printed.

Is There Any Risk of Cyber Robbery
When Storing Cryptos on a Wallet?

When using any type of wallet, you need to be careful about viruses and malware such as Trojans on your computer. Whether you’ve stored your cryptos on a hardware device or an online wallet, you will need to connect to a computer to access it. Cyber criminals can use advanced viruses to retrieve the information when you access your wallet on your smartphone, PC, laptop, or tablet.

How to Protect Cryptos in a Digital
Wallet from Cyber Robbers?

Here are a few things you can do to protect your crypto digital wallet:

  • Choose the right type of wallet to store your Bitcoins or other cryptocurrencies. If you are using a hardware device (or cold wallet), remove the device from the computer as soon as you have completed using it.

  • When accessing a hardware wallet, disconnect the internet as soon as your work is done. This significantly reduces the chances of a hacker gaining access to the wallet.

  • Consider keeping a backup of your hardware wallet in separate locations.

  • In case your hardware device gets corrupted and you need to hire a professional to retrieve your data, ensure to change the password once the work is done.

  • If you wish to conduct large crypto transactions regularly, it’s probably a good idea to choose a paper wallet, as it has an additional layer of security inbuilt. Since paper wallets are not connected to the internet, hackers find it extremely difficult to access them online.

  • If an individual offers to buy your cryptocurrency or sell you some, be vigilant. Check the digital footprint of the person and establish their credibility. While there is a lot of hype about the advantages of anonymity with Bitcoins, don’t hesitate to ask for valid proof of the individual’s identity. If you are unsure of whom you are dealing with, you are exposing yourself to potential scammers and cyber robbers.

  • Disconnect your device from the internet before creating any private keys.

  • As suggested by its name, a private key is supposed to be exactly that - private. Sharing your key details with anyone means that you have practically handed over your coins to that person.

  • Use your intuition. If a deal offered for your coins sounds too good to be true, it probably is. You can be almost certain that the proposal has come from a cyber robber. Crypto traders should also be aware of ransomware, a malicious software that displays messages demanding money.

  • Ask enough questions until you are convinced. While you do background checks of the individual or company offering the digital wallet, keep asking for evidence of everything they claim. Scammers generally don’t like to waste time and will lose interest. Also, if they have not given satisfactory answers to all your questions, you can decide against dealing with them.

  • When storing Bitcoins in a virtual wallet, ensure you protect it with a strong password. Create a strong password and get into the habit of changing it on a regular basis.

  • Irrespective of the wallet you choose, you will be accessing it on a device. It’s a good idea to run a malware check before accessing your hardware, virtual or paper wallet.

  • Know how to remove your crypto transaction footprint on your device as hackers can access this long after you have finished accessing your coins.

  • Consider enabling multiple signatures, which adds an additional layer of security. With this, a hacker will need to decode two or more wallet keys to gain access to your account or intercept a transaction. This is much like the two-factor authentication used by certain websites. One signature may be used to access the wallet and another to execute the transaction.

  • Ensure that the digital wallet is provided by a reputed company. Verify all the claims made by the company on their website.

Buying and Selling
Cryptocurrencies on
an Exchange

Bitcoin has a daily transaction volume of around $6 billion! Given their familiarity with exchanges, many investors choose to transact in cryptocurrencies via an exchange that supports digital currencies. These platforms can be accessed online through your browser or an app. On these exchanges, users can buy and sell different cryptocurrencies either by using fiat currencies (like US dollar, pound, euro, etc.) or another cryptocurrency.

Is There Any Risk of Theft When
Trading Cryptos on an Exchange?

While leading exchanges follow stringent safety protocols to prevent cybercrimes, there is the risk of the exchange being hacked. If this happens, you could lose the cryptocurrencies you own. Some exchanges follow the approach of not actually handing over the cryptos to you and give you a contract (like an IOU) instead. In this case, your coins are more secure. There is one risk that you face. If the exchange goes bankrupt or is forced to fold, you could lose your coins.

How to Protect Cryptos from Being
Stolen When Trading on an
Exchange?

In 2017, a cryptocurrency exchange called NiceHash got hacked, with Bitcoins worth more than $60 million getting stolen. Some clients of the exchange lost their entire wallets. There is practically nothing you can do when such an event occurs as law enforcement agencies are generally unfamiliar with the merging space that is cryptocurrency. Therefore, it is important to follow some simple steps for added security when dealing with an exchange.

  • Before you consider trading cryptos on an exchange, ensure you have done your homework to choose a reputed one.

  • Once you have chosen the exchange, use all the security measures available. This may make your transactions more time consuming, but using the authenticator and phone verification can help discourage cyber robbers.

  • Choose a complex password to log into the exchange. A combination of your name and birthday is probably the most unsafe password. Avoid using the same password that you use for your email, social media accounts such as Facebook or LinkedIn, and shopping accounts. Using identical passwords across different platforms/devices will make you an easy target for hackers as they can access your password from other platforms to attack your crypto accounts.

  • Change the password regularly. Doing so makes it more difficult for criminals to hack into your account. Also, avoid sharing your password with anyone. If you save your password on your computer or smartphone, ensure that no one else uses those devices.

  • Never access your account from a public computer, as you may not know who else is accessing it. Avoid using someone else’s computer, even if it is a close friend as their devices may unknowingly be compromised.

  • Be aware of mobile apps that can appear to be the official app of a leading platform. Such fake apps are most common for Android devices, although scammers have not spared iOS either. These fraudulent apps, available for download on the App Store or Google Play Store, could connect to exchanges and gain access to the passwords of user accounts. If you wish to use the app of an exchange, it’s best to find the page on their website that connects to the app. If you cannot find this page, it is safer to assume that the particular exchange does not have their own app.

  • If you must trade on an exchange, choose a centralised exchange that is regulated by an established regulatory body. Avoid decentralised

  • cryptocurrency exchanges that facilitate direct peer-to-peer trading. Irrespective of which exchange you choose, start trading with them only after you have done your homework to determine their reputation.

How to Trade
Cryptocurrency CFDs?

Feeling apprehensive about being able to protect your Bitcoins from hackers? There is a way to gain exposure to this exciting asset class without the hassle and headache of owning it. Trading crypto CFDs allows you to gain exposure to the rise and fall of Bitcoin and other cryptocurrencies, without actually buying or selling the coins.

A CFD, or contract for differences, is a derivative financial instrument that is extremely simple to trade and has gained immense popularity over the past decade. The price of the CFD is based on the price of the underlying asset, which could be a leading cryptocurrency like Bitcoin, Ethereum, Ripple, Bitcoin Cash, or Litecoin. For instance, a BTC CFD will mirror trading in Bitcoins, which means price movements in BTC CFD trading will be driven by price movements in actual Bitcoin trading.

Is There Any Risk of Theft
When Trading Crypto CFDs?

With crypto CFDs, you neither own coins nor are you trading in coins. So, there is no question of your coins being stolen. Cryptocurrency CFD trading allows you to gain exposure to the rise and fall of crypto prices without the need for a digital wallet or a cryptocurrency exchange.

There are several other advantages of trading crypto CFDs. To begin with, you can gain exposure with low capital. Since you don’t need to buy Bitcoins or altcoins, you can enter the exciting crypto world even if you have limited capital. Moreover, you can find trading opportunities even if prices are falling.

There is one thing you need to be careful about in crypto CFD trading – the choice of broker.

How to Choose a Creditable Broker
for Trading Crypto CFDs?

If you are planning to trade crypto CFDs, it is highly advisable to choose a regulated broker. When checking for regulated brokers, remember that there are different regulatory agencies, all of which may not have the same level of requirements. The leading regulatory agencies that have the most stringent investor protection are the ASIC (Australian Securities and Investments Commission), the FCA (the UK’s Financial Conduct Authority) and the CySEC (Cyprus Securities and Exchange Commission). Regulated brokers comply with the highest standards, like maintaining segregated accounts to protect their clients’ funds.

It’s also advisable to select a broker that is fully licensed to provide financial services and ensure that the license has been provided by a strong financial watchdog. For instance, a broker that holds an Australian Financial Services Licence (AFSL).

Look at the regulation page on the broker’s site for more detailed information and to ensure you can trust them. This is the best way to avoid the threat of scams. Also, established brokers will adopt safety protocols to prevent thefts, follow best practices to protect user information and have 128-bit encryption for secure trading.

What are Some Other Ways to
Protect Bitcoins from Being Stolen?

Avoid mentioning your Bitcoin investment in the virtual world, whether it is on a social media platform or a review site. Successful traders earning a high income should be cautious as hackers have developed unique ways to target them such as online chat rooms.

Can I Retrieve My Stolen Bitcoins?

Unfortunately, there is no easy way to retrieve a cryptocurrency that has been stolen from a wallet. Since cryptocurrencies are based on the premise of anonymity, there is practically nothing you can do if a hacker gains access to your private keys. In the case of exchanges, choose one that is thorough with the KYC process. This means you can trace the person who has stolen your Bitcoins, provided it is someone with an account on the exchange.

The cryptocurrency market is expected to record a compounded annual growth rate of more than 50% between 2019 and 2025. If you’d like to be part of this exciting ecosystem, it’s important to know how to protect your assets. By following a few steps, you can trade safely and securely while protecting your assets from attacks by hackers and cyber robbers.

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