How to Keep Your Cryptocurrency Safe from Hacks and Cyber Attacks

How to Keep Your Cryptocurrency Safe from Hacks and Cyber Attacks

Reading time: 8 minutes

While cryptocurrencies have attracted millions of investors and traders over the past decade, they also attract a darker element: cybercriminals. According to SlowMist, a leading blockchain security firm, around $31 billion has been siphoned off through various crypto attacks since 2012. One reason for this alarming figure is that the near-untraceable nature of digital assets provides a cloak of anonymity for hackers.

These attacks come in many forms. These range from individual-level tactics like airdrop crypto scams, phishing, and SIM-swap attacks to large-scale operations targeting decentralised finance (DeFi) platforms and cryptocurrency exchanges.

The increasing sophistication of cyber threats calls for a solid defence strategy. Today, we’ll break down some essential crypto security best practices, from foundational access controls to software cybersecurity measures and protecting against targeted attacks.

Access Controls

Maintain a Strong Password:

The first line of defence is a unique, strong password, guarding wherever you store your crypto assets. Ideally, it should be different from your other passwords, exclude any personal information, and be updated semi-regularly. Password managers can securely generate and store unique passwords on your device, meaning you don’t need to remember them.

Employ Two-Factor Authentication:

Adding a second layer of security through two-factor authentication (2FA) is crucial. However, SIM-swap attacks, where hackers take over your phone number to receive authentication codes, make SMS-based 2FA less secure. It's wiser to use a 2FA mobile app that generates these codes, though the best approach is to combine multiple authentication factors.

Guard Your Private Key:

Every crypto wallet has a private key. Private keys allow the holder (including you or an attacker) to recover a wallet and gain access to the wallet’s funds. While guessing these private keys is virtually impossible, hackers can gain access to them in other ways, like through social manipulation or account hacking.

Never share your private key with anyone, and avoid storing it anywhere online or, if possible, even on your computer. Physical, offline storage in a secure place, such as a safe deposit box, is typically the best method.

Software and Hardware Security

Store Crypto in a Cold Wallet:

There are many crypto wallets, the most robust being a cold wallet. Cold wallets are generally USB-based hardware wallets designed explicitly for storing crypto. They are ‘cold’ since they aren’t internet-connected and require a specific password to unlock. Even in the case of physical theft, the perpetrator would still need to know this passkey to access your crypto assets. However, losing this key can mean losing access to your investment.

Trade With Reputable Exchanges:

Crypto exchanges function as brokers, but there’s a key difference: a broker will likely have insurance on their deposits, whereas most crypto exchanges don’t. In the case of a cyberattack, there is a possibility you could lose your investment if you choose to hold your crypto on an exchange.

When choosing a crypto exchange, it’s best to opt for the platforms with a strong reputation for security and customer service. Those that store the majority of user funds in cold storage (crypto held in cold wallets) are also preferable. Lastly, look for those with user safety measures, like transaction size limits, multi-factor authentication, and withdrawal notifications.

Use and Regularly Update Antivirus and Firewall Protection

Ensure your computer and mobile devices have up-to-date antivirus and firewall protection. Regularly update them to shield against new vulnerabilities and malware threats, preferably by turning on automatic updates.

Take Advantage of VPNs:

Using a Virtual Private Network (VPN) isn’t essential every time you do something crypto-related, but it’s a good idea, especially when using public Wi-Fi. VPNs mask your IP address/location and encrypt your online activity. While it isn’t a standalone solution for crypto security, it’s another obstacle for cybercriminals.

Investor Vigilance

Stay Wary of Phishing Attacks:

Phishing attacks often come in an email, usually disguised as a trustworthy source. Many scammers will aim to replicate crypto exchanges like Binance or Coinbase, typically claiming a non-existent transaction has failed, or your account has been locked.

While many email providers detect these emails as spam, your best bet is always to double-check URLs and the sender's address. If in doubt, contact the purported sender’s customer support via their official website.

Avoid Anything That Seems Too Good to Be True:

In the same vein as phishing attacks, many scammers use social manipulation to take advantage of unsuspecting targets. These scams are wide-ranging.

Romance scams create a rapport with a target, usually over weeks and months. They might request crypto for an emergency expense or invite them to join a crypto trading group. On the other hand, investment scams often claim that a specific person/piece of software has been able to generate extraordinary returns by crypto trading.

The best advice here is to avoid anything that feels too good to be true. If you’re unsure, consult a trusted friend or relative and search for similar experiences online.

Don’t Flash Your Crypto Holdings:

While social media platforms may seem like a good place to share successes, they’re also hunting grounds for hackers. Many crypto influencers have been specifically targeted after flaunting their digital currency wealth, but anyone can be a target.

Maintaining a low profile about your crypto holdings is one of the best security measures here, but also avoid sharing sensitive information over private messages, even with someone you trust.

The Bottom Line

While crypto cyberattacks aren’t going away anytime soon, these steps can significantly reduce your chances of falling prey to a hacker. Remember, the weakest link in your crypto security is often human error and oversight. It’s a good idea to adopt a cautious, vigilant approach, staying aware that protecting your crypto investments isn’t a one-time action but an ongoing commitment. Take these precautions and enjoy the peace of mind of knowing you’ve done your due diligence.