One of the most common questions for investors is – is crypto safe? Based on data collected by cnbc.com, the year 2021 was noteworthy for increased cases of fraud related to cryptocurrencies; the damage is estimated to be around $14 billion worldwide. What’s even more alarming is that such ill-gotten income was pilfered from DeFi protocols, which are known as an especially prosperous sector.
Knowing the important steps (read below) and educating yourself can help to achieve high results and profits. However, without taking the necessary action, there are various risks. The majority of frauds occur under one of three classic setups, such as:
- Crypto giveaways. By creating profiles on the most popular social networks, scams use the image of influential people. In this way, people are encouraged to deposit cryptocurrencies to the specified wallet address, which will supposedly double. Unfortunately, this is not true.
- Phishing emails. Cases of data leakage are common when people receive email letters, which at first look reliable and official. However, opening the link infects the device with malware that targets cryptocurrency wallets.
- Ponzi schemes. Traders, looking for a way to get rich quickly, use speculation, known as Ponzi schemes. It offers extremely high rates of return for little to no effort on the investor’s part.
Choosing a Secure Wallet
Considering how to store cryptocurrency, choosing a wallet is one of the main steps. It keeps your private keys safe and accessible – passwords, allowing you to send and receive cryptocurrencies. Types of crypto wallets are various, from simple-to-use apps to more complex security solutions. Familiarize yourself with the main ones:
- Hardware wallets. Private and public keys are stored on a thumb-drive device. This is a safe place that is connected to a computer when you want to use your cryptocurrencies. It allows users an opportunity to try to balance security and convenience at the same time.
- Online wallets. Private and public keys are stored in an app or other software. Experts recommend choosing ones that are protected by two-step encryption. So sending, receiving, and using your crypto is as easy as using any online bank account, payment system, or brokerage.
- Paper wallets. Private and public keys are stored on a physical medium (e.g., paper), so security is guaranteed. However, the use of this kind of cryptocurrency is harder because it is not on the internet.
How to store bitcoin (or other cryptocurrencies)? How to choose a secure wallet? That’s the question! Primarily, keep in mind that security is the most important factor. So, find out if your chosen crypto wallets have private key control, two-factor authentication (2FA), multi-signature capability, backup and recovery options, and robust security features such as encryption protocols. Also, for a better user experience, the wallet must be easy to use, including updates with the latest security patches and features and a strong customer support system.
Secure Password Management
We have probably heard more than once how important it is to create unique and strong passwords – this ensures security with cryptocurrencies and other systems. In creating passwords, we should use different versions for each site. Also, do not provide personal information (name, date of birth). It is much better to include a variety of symbols, numbers, and upper/lowercase letters, ensure proper length, and avoid short words.
If there are so many passwords for different accounts and you are having trouble remembering them all, we recommend using a password manager. This system, located on your phone, tablet, or an app, stores your passwords. When you log in to your password manager with your master password, it will create and remember passwords for all of your online accounts. Many password managers can also enter your passwords for websites and apps, so you don’t even have to type them every time you log in.
Implementing Two-Factor Authentication (2FA)
These tools provide passcodes that self-destruct and renew every 10 seconds. Specific codes are linked to each of your accounts and make it increasingly difficult for a hacker to access them. Like the seed phrases used with crypto wallets, backup codes for these apps can be generated to recover master accounts on new devices. Most importantly, Two-Factor Authentication (2FA) will help you have higher security for your cryptocurrency wallet accounts. By the way, its function helps set a new standard for user protection in the cryptocurrency exchange market.
Protecting Against Scams and Phishing
Scammers are looking for all sorts of ways to embezzle your money, which is why you need to be extra careful when holding cryptocurrencies. The most common scams are – fake websites, apps, phishing emails, pump-and-dump schemes, and giveaway scams. When figuring out how to protect cryptocurrency, first of all, it is necessary to be careful and pay attention to:
- promises of guaranteed returns;
- a poor or non-existent whitepaper;
- excessive marketing;
- unnamed team members;
- free money.
Backup and Recovery Strategies
Backing up the wallet data is one of the most essential matters to ensure the security of cryptocurrencies. Without a backup, you’re vulnerable to data loss due to hardware failure, computer viruses, or theft. If any of these events occur, your wallet and all its contents could be irretrievably lost. In addition, you also risk losing access to your funds if you forget or lose your wallet password.
No less important is backing up a seed phrase, which is a sequence of words that a cryptocurrency wallet uses to access your cryptocurrency holdings. Securely backing up your seed phrase is a very important step because knowledge of the seed phrase effectively serves as ownership of funds. Consider physical security, data security, and time-driven deterioration. There are included options – digital vault, crypto steel, local computer drives, cloud storage, “brain wallets”, and paper.
Regular Security Audits
Even if you have taken security measures, do not forget to do it regularly, because fraudsters never sleep and are looking for all kinds of ways to harm. Perhaps you have more security-related questions or want to learn more about investing in cryptocurrencies? That’s what we, “Orbitos”, are for. You are welcome to apply!
