5 Basic Tips to Protect Your Crypto Wallet from Theft

Cryptocurrencies have taken the world by storm, becoming increasingly popular among individual investors. There are more and more people who start using cryptocurrencies for the first time, as well as more professionals starting to work in this industry. This new asset class is being adopted as a payment method at offline stores, a means of storage of wealth, for individuals, corporates and even governments. The blockchain technology which cryptocurrencies are typically built upon, became a strong force behind Central Banks Digital Currency (CBDC) adoption in many countries.

However, with this growth comes a corresponding increase in the risk of fraud and scams. In the year of 2022 alone there were more than $3 billion funds stolen. Therefore, it is essential to take precautions to protect your crypto wallet and avoid falling prey to scams. Over the past three years our tools helped clients save over $5 million from fraudulent activities. This article summarizes our key advice and helps cryptocurrency holders understand how to better protect their funds.

UNDERSTAND THE CRYPTO WALLET CONCEPT

Just started to invest in crypto? Don’t worry, in this article I will tell you about the main tips you should know before signing up for any cryptocurrency exchange.

The very first thing to understand is the concept of a crypto wallet. It really is very similar to an actual wallet in your bag. The main function is still the same - to keep your funds safe and organized. And just like a regular wallet, your crypto wallet needs to be securely stored, so that nobody could steal your assets. A crypto wallet is a software program that stores private and public keys and interacts with various blockchains to enable users to send and receive digital currency and monitor their balance.

A user can typically get a brand new wallet set up with one of the major crypto exchanges in minutes. Some of the more popular names you might have heard of would be Coinbase, Kraken, Crypto.com, Binance.

These exchanges provide you with a hot wallet, which is accessible online and means that your crypto is stored with the exchange and its cybersecurity team. The exchange would provide a set of keys to make a note of. You should neither share your keys with anyone, nor store them on your computer. If hackers acquire your private key or the exchange gets hacked, you will lose your assets forever.

USE A TRUSTED WALLET PROVIDER

A reputable and secure wallet provider will offer features that guarantee the safety of your funds. Apart from the major exchanges mentioned above, you can sign up with more trusted wallet providers, such as Ledger, Trezor, and Exodus. They offer multi-currency support, two-factor authentication, and integration with hardware wallets, among other features. These measures ensure that your crypto assets are secure and cannot be accessed by unauthorized persons.

KEEP YOUR PRIVATE KEY SECURE

Another essential practice for securing your crypto wallet is to keep your private key secure. A private key is a secret code that allows you to access and transfer funds from your crypto wallet. As I pointed out in the beginning of this article, it is crucial to keep this code safe by using strong passwords, storing it offline, and not sharing it with anyone. By doing so, you prevent unauthorized access to your wallet, and your assets remain secure.

USE TWO-FACTOR AUTHENTICATION

Using two-factor authentication can significantly increase the security of your crypto wallet. Two-factor authentication requires a second form of verification in addition to your password, thus providing an extra layer of security. This could be a fingerprint, facial recognition, or a code sent to your phone or email. Examples of two-factor authentication methods include Google Authenticator, Authy, and YubiKey.

USE A VPN

Furthermore, using a Virtual Private Network (VPN) can help protect your crypto wallet from scammers. A VPN encrypts your internet traffic and routes it through a secure server, protecting your privacy and security. By using a VPN, you prevent hackers from stealing your login credentials and accessing your crypto wallet. It is essential to choose a verified VPN provider and avoid giving access to your device to an unreliable VPN service.

USE A HARDWARE WALLET

Finally, using a hardware wallet is another practice that can help secure your crypto assets. A hardware wallet (also called a cold wallet) is a physical device that stores your private key offline, providing an extra layer of security against cyber threats. Popular hardware wallets include Ledger, Trezor, and KeepKey. These wallets are designed to be tamper-proof and provide a secure way to manage your crypto assets.

CONCLUSION

By adopting best practices such as using a trusted wallet provider, keeping your private key secure, using two-factor authentication, using a VPN, and using a hardware wallet, you can increase the security of your crypto wallet and minimize the risk of fraud and scams. These are just the basic steps to get familiar with when you are starting your journey with cryptocurrencies. I suggest for you to keep learning and expanding your knowledge about this space, the more you know the better protected you are.

To learn more about preventing cyber attacks on your wallet, check out this blog post by AMLBot.