Cryptocurrencies are here to stay, despite the volatility this year. However, the security of your crypto assets can be strengthened. In this contributed post, here's how... Remember this is not meant to be financial advice. It's purely for educational purposes.
What are Cryptocurrencies?
At the moment, there are thousands of cryptocurrencies to choose from and many ways to use them. But the most common thing is to buy and sell. In short, cryptocurrency means cutting out the middleman when it comes to online transactions. Currency like Bitcoin or Litecoin works on a peer-to-peer network, where transactions are sent directly from one person to another safely and anonymously. Other internet vendors like PayPal and Venmo are supposed to be safe. Still, they can be hacked even though they have good security in place.
Blockchain and the Security of Your Crypto Assets
A blockchain is a digital ledger that is decentralized, shared, and often public. It is made up of archives known as blocks which are used to process transactions throughout many computer systems. No block can be changed back without changing all the blocks that came after it. Distributed ledger technology is a framework that keeps each block in a series of databases, called a chain, hence "blockchain." These are connected by peer-to-peer (user) computers. This kind of storage is commonly considered as a secure digital ledger of accurate records.
The Difference Between Hot and Cold Wallets
There are two types of storage methods for crypto. These are hot (online) and cold (real-world) wallets. A hot wallet is an account you keep online. Hackers can get into your online account, which means you could lose everything. So it's best not to leave money in your hot wallets for long periods. On the other hand, you can get a cold wallet for very little money. A cold wallet is a USB drive that you can use to store your money. It can't be hacked because it isn't connected to the internet. As long as you keep your cold wallet password safe, of course.
How to Secure Your Assets
Securing crypto assets isn't too tricky. All it requires is some basic knowledge and common sense. Some of the simplest methods of developing a security strategy include the following:
- Only use well-known crypto exchanges with high trust ratings.
- Secure your internet connection with a VPN, and never use public Wi-Fi.
- Use multifactor authentication when logging into wallets and exchanges.
- Keep up to date with the latest crypto scams and how to prevent them.
- Spread your assets across multiple hot and cold wallets.
Basic internet security, like using VPNs and staying off public interfaces, goes a long way. But you can also enhance security with two-factor logins when you use online services.
Why You Should Use Multiple Wallets
At its core, blockchain technology is remarkably safe. And you may have read that it can't be broken into. Unfortunately, however, this isn't the case. Those who know how and have the skills can steal your cryptocurrency. And just over $3 billion worth of cryptocurrency was stolen in 2021 alone. In most cases, the assets were stolen because they were left in a single standard online hot account instead of in several safe accounts. In general, you shouldn't leave all your crypto assets in one place. If someone gets into your account, you'll lose everything.
The Security of Your Crypto Assets Relies on Vigilance
Criminals get cryptocurrency in two main ways. They either steal it directly or use a trick to get people to give it to them. Because of this, crypto theft is on the rise, year after year. Since 2020, it has increased at a rate of around five times more than the previous year. If your assets are stolen, recovery is possible. In theory, if you keep an eye on the blockchain, you might be able to find your stolen bitcoin. In practice, this is hard to do because the currency is anonymous. The thief will probably use a crypto exchange to immediately cash it out to regular accounts.
Cybersecurity and Why You Need It
Every day, criminals all over the world try to hack computers tens of thousands of times. And there's no reason why your cryptocurrency assets, business accounts, or digital wallets couldn't be next. Fortunately, you can prevent most attacks with basic cybersecurity. This means using up-to-date malware, protecting email accounts with solid passwords, and never writing anything down. Spending time each week reading about the latest hacking news and developments is also a good idea. Then you can plan your cybersecurity strategy and protect your assets.
Summary
You can easily strengthen your crypto assets' security with minor changes. Understand how the system works, use hot and cold wallets and keep up with cybersecurity.