Ransomware attacks are common. It encrypts the data or files in a system or network making it dysfunctional. Usually, in such cases, the criminal behind these attacks demands an amount in exchange for the release of the data.
In June 2021, the United States law enforcement officials recovered $2.3 million that was paid in the Colonial Pipeline ransom. However, the news was confusing, which led to the lowering of the Bitcoin price as it questioned the security of cryptocurrency.
Although it is still not known how it was done, experts suggest that as the criminals stored the Bitcoins in private keys, the FBI was able to retrieve them. Private keys are like passwords consisting of a string of numbers and letters. These keys are used to unlock the holder’s cryptocurrency, and must not be disclosed to the public.
What Are The Types of Crypto Wallets?
Today, majority of the people hesitate to invest in crypto due to the lack of security. Moreover, the lack of proper regulations and the dependency on crypto protection limited to investors have developed fear among users. Before attempting to secure your wallets, it is important to understand the types of crypto wallets.
If you decide to buy cryptocurrencies, it is important to choose the wallet to store them. There are two types of crypto wallets, custodial wallets, and self-custody or non-custodial wallets.
What is a Non-custodial Wallet?
Non-custodial wallets are also known as self-custody wallets where the user can have the private keys, and own the cryptocurrencies by themselves. In this case, the user has to take responsibility for their cryptocurrencies and remember the private keys. In case a user forgets their private keys, they will not be able to access their digital assets.
This means that the user needs to apply backup mechanisms like cold wallets and hardware wallets, to store the currency offline. Some users may consider it to be the safest option, however, it can still be stolen. On the other hand, when you store currencies online, a hacker may enter the wallet and steal your money. No matter how you choose to store your crypto, you need to have a backup for your private key, or you may end up losing it all by mistake.
What is a Custodial Wallet?
With the help of a custodial wallet, a crypto exchange takes responsibility for holding your currency for you. Top exchanges like Gemini, Coinbase, etc offer custodial wallets and are in control of your currencies. When you buy a cryptocurrency from an exchange, you will be provided with an ‘IOU’, while the exchange will own the private keys. This means that when you buy a Bitcoin from PayBito, the platform will hold your currency until you decide on withdrawing it.
There is a popular saying in the crypto community,- “Not your keys, not your cryptocurrency”. However, it is still a viable option as you don’t have to worry about storing and securing your cryptocurrency. Institutional investors opting for custodial wallets should ensure conducting thorough research before choosing one.
How Frequently do Crypto Wallets Get Hacked?
With the growth in cryptocurrency users, the threat of crypto crimes is simultaneously increasing. Since 2012, crypto worth $3 billion were stolen worldwide. Since the pandemic, there have been a dozen attacks in the crypto industry with a reported loss of half a billion since 2020.
Hackers can decipher your private keys, or password and hack into your wallet. They can attack exchanges, take information from users through phishing, and more. The most common way of stealing from your wallets is by stealing your private keys. It is not possible to completely safeguard your wallet from hackers. However, here are some of the ways that you can imply to keep your wallet safe.
7 Tips to Keep Your Crypto Wallet Safe From Hackers
If you are planning to invest in crypto and are worried about keeping your crypto wallet safe, here are some tips that will help you to employ security in your investment.
1) Use a Cold Wallet to Store Your Digital Assets
The first step to keeping your crypto safe is to store it in a cold wallet. If you need the currency for transitions, only keep a few of it online, and the rest offline hardware wallet to keep it safe from cybercriminals. Cold wallets safeguard crypto in removable storage devices like USB drives. However, it also means that losing the private key means losing it all.
In recent events, two investors lost their private keys, and their investment value raised to several million dollars. After hiring a private hacker, only two million dollars worth of crypto were extracted. Even with hacking possibilities, it is best to keep your private keys in a secure place.
2) Use a Prominent Exchange to Buy, or Sell
Before investing in a crypto exchange, it is important to understand that even though exchanges are safe, some provide more security than others. For example, PayBito’s underpinned blockchain technology ensures high-end security for investors compared to other competitors in the market.
The majority of the crypto exchanges will not ensure your crypto security due to the chance of cyber attacks. This is why it is important to choose exchanges with features like two-factor authentications or 2FA and TLS/SSL encryption.
3) Use a Password Manager and Change it Regularly
In today’s world, almost every password you generate can be breached. Therefore, the best way to store your crypto is by creating a complex password. It is also important to change it every now and then.
Make sure not to reuse an already existing password. Experts suggest not to use any personal information in passwords, and to use a password manager to remember your passwords and maintain them.
4) Be Safe from Phishing
Phishing is when hackers act like a legitimate authority and extract information from you. One of the best ways to avoid phishing is not to log into your crypto account unless you are sure of the site’s authenticity. It is best to save the URL link rather than click a random link sent to you by a stranger. Any text or call that asks for your personal information is a “red flag”.
5) Separate your Crypto Profile From Personal and Work Files
It is important to keep your crypto accounts, and personal or work accounts on separate devices. Make sure to create a different email account for your crypto account rather than using a personal or work account that might delete in the future. It is important to not use any public device for logging into your crypto account to avoid hacks.
6) Only use Personal WiFi
It is important to avoid public WiFi when logging into your crypto account. Moreover, always use a VPN to hide your location and IP address. VPN is the best way to hide your activities and maintain your privacy. It helps to create a tunnel that hides your activities from hackers.
7) Install Updates Regularly
No matter what software you choose to use, make sure you keep it updated. Users can “Install updates automatically”, including any applications uploaded to the device. Lastly, install antivirus software on your device.
The tips may seem a lot to keep it safe from hackers, but the more you make it complex, the more difficult it would be for the hackers. Today, hackers are using sophisticated ways to hack into accounts and steal cryptocurrencies. It is not possible to keep your wallet 100% safe from hackers, however, the above tips will help you prevent criminals from attacking your wallet.