How to Secure Your Cryptocurrency Holdings

Cryptocurrencies are a growing concept that has shifted the way and manner in which we interact in present times. Particularly amongst young and middle-income earners, there has been a developing use for cryptos in various transactions.

Over the years, the crypto market has seen the introduction of numerous products that have caused an overreliance on traditional finance concepts to reduce considerably. 

Nonetheless, with this continuous rise in the use of crypto, there also exists a negative impact on the resultant growth. Some negative impacts include theft, hacking, and stealing.

In this post, we look at the varying ways of securing your cryptocurrency.

Understanding the Importance of Security

The crypto space is a plug-and-play system that adopts blockchain technology that allows its users to interact and transact effectively. 

The blockchain works as an open ledger that captures all transactions from both parties at different ends in real time. When one buys a crypto, the ownership status is recorded through encryption using blockchain technology. 

There exists a slim chance that anyone can access your crypto through an alteration of the data on the blockchain. Nonetheless, hackers can decrypt your private key and access your crypto.

In addition, the cryptocurrency space is highly decentralized, which is the direct opposite of conventional banking, where transactions are undertaken through highly centralized regulators. 

For instance, one can lose funds through a hardware malfunction and still not get redress for the situation.

For these reasons, your cryptocurrency holdings can be exposed to phishing attacks, hacking, and a whole lot of other risks.

Best Practices for Securing Cryptocurrency Holdings

Hardware Wallets

After purchasing your cryptos, it's best to have them saved in hardware wallets. Placing your cryptos saved in cloud storage or software wallets increases the risk of your private key being hacked. 

Having a hardware wallet allows you to store your cryptocurrencies offline and exposes the chances of hacking your private key to a much lesser degree in the long and short run.

Use 2-factor Authentication (2FA)

Aside from hardware wallets, crypto users can also adopt 2-factor authentication. Generally, some cryptocurrency platforms provide some sort of 2FA to users. 

Nonetheless, using strong two-factor authentication is advisable. YubiKey is a key example of such strong 2FAs that can protect your crypto. 

Where your servers do not support YubiKey, you can adopt authentication applications that include either Duo Security, Google Authenticator, etc. SMS-based 2FAs are a bit riskier compared to the latter.

Cold Storage

Cold storage platforms are storage platforms or wallets that have their private keys offline. 

These storage devices offer increased security because they are not connected to the cloud and, hence, are not subject to hacks and breaches. 

Example: a simple piece of paper with your private keys written on it.

Strong Passwords

Always use a unique and strong password. Look for passwords that contain capital and small letters, symbols, and numbers. 

Also, regularly change your passwords; this reduces your risk of hacks and breaches. You could also adopt a trusted and secured password manager to store and manage your passwords.

Regularly Update your Software

Your cryptocurrency software platform goes around the clock to update itself regularly to avoid security breaches. 

To be up-to-date on this, you should regularly update your server’s software to avoid vulnerabilities and security exploits.

Identifying and Avoiding Common Security Threats

In the crypto world, there are common security threats that you'll likely encounter during your journey. Here are some of those threats:

Phishing

Phishing threats are often present in the crypto space, but they are also highly common outside it. 

Phishing occurs when hackers pose as representatives for trusted companies, for instance, a cryptocurrency platform, by emailing crypto users and getting them to click links or undertake acts that would expose them to hacking risks. 

Fake browsers, DNS hacking, phishing bots, etc., are some of the necessary phishing techniques hackers deploy against crypto users.

Malware

Malware allows the hacker to mine the crypto through another server. It often begins with hackers placing malware in advertisements using phishing. 

When users click on the advertisement, the malware gets into the computer and often gives the hacker access.

Social Engineering

Social engineering is perhaps the most common form of crypto-security threat today. Social engineering employs the use and study of human psychology for exploitation. 

The social engineer uses texts, mail, and phone calls to obtain sensitive information from an unsuspecting victim.

Public Wi-Fi

When getting online to access your crypto wallet, it is advisable not to use public Wi-Fi that can expose your crypto account to hackers, making you vulnerable. 

To avoid this, ensure using protected private Wi-Fi or VPNs.

Backup and Recovery Strategies

Backing up Seed Phrases

Seed phrases protect your cryptocurrency by adopting a safe technique to restore it. 

This mostly comes in handy when you open a new crypto wallet, and you need to write down and safeguard your seed phrase. 

The recovery performs similarly to a backup of your private key.

Creating Redundancy

This is another way to support or recover your funds. Redundancy works by offering all members of a crypto network a copy of the blockchain record. 

This ensures that every piece of data in the system is authentic and, therefore, that the blockchain is tight.

Conclusion

In this work, we explored the varying ways your crypto holdings can be protected. We dived into some of the varying ways hackers exploit crypto users.

Crypto users must be on top of their game by ensuring all steps are employed to maneuver the challenges of crypto hacking.