Protecting your Digital Currency Portfolio against Threats

 From thetechfools.com

The creation of bitcoin in 2008 by Satoshi Nakamoto presented a world with several possibilities. People looking to shift from the traditional banking system had another option to store value. Bitcoin was created with several security features such as irreversibility, decentralization, and encryption.

Despite the advanced security the premier cryptocurrency offered, hackers found different ways to exploit loopholes. Since the massive increase in the value of various digital coins and tokens, the crypto space has been plagued with cybersecurity issues.

Security Risks Related to Storing Cryptocurrency

1.       Losing your Digital Currency Private Keys

A private key is a long string of numbers and letters that grant you access to your cryptocurrency wallet. It’s the equivalent of a username and password combined into one to log into your internet banking.

Your private key is only sent to you once and isn’t stored on any server. If you have funds in your wallet and forget the private key, you’d lose all access to your funds forever. Private keys can be lost when the piece of paper on which the key was stored gets lost or damaged. For hot wallets, losing access to your email address and password would mean loss of the funds.

2.        Ransomware Attacks

Ransomware is a dangerous type of software created by hackers to deny you access to your computer. These hackers ask for a ransom before files on the system become accessible again.

If your private key is only stored on your computer, you’d be willing to part with a large number of your crypto funds to regain access. Once this happens, it would be difficult to track the hackers because of the anonymous nature of most digital currencies.

3.       Accessing your Exchange Wallet

There are various methods of storing cryptocurrency, and centralized online exchanges are one of them. Several crypto investors prefer them because they provide quick access to a variety of digital coin transactions.

Online exchanges use hot wallets, which can be accessible at any time. However, they come with a downside: hackers could also gain easy access to the wallets too.

Several online exchanges using hotwallets have been hacked at one point or the other. They include Binance, Mt. Gox, Coincheck, Poloniex, Bithumb, and so on.

Shielding your Crypto Funds from Theft

1.       Backup your Private Key Backups

Don’t just rely on one backup for your private keys. Use multiple backups in the form of handwritten paper wallets. Also, make sure they’re safe and in different locations. You certainly don’t want a hacker to have access to them.

You can also save your private keys on password managers. Another option is to save a file containing the key on a USB stick. Avoid using the USB stick on internet-connected computers too.

2.       Use a VPN

A VPN is a security tool that encrypts the flow of internet traffic between your computer and the network to which you’re connected. The purpose of this tool is to protect you from hackers that attempt to spy on your activity.

Cybercriminals like to intercept home routers or public Wi-Fi to track the activities of public Wi-Fi users. Imagine a situation where you’re inserting your private key to access your wallet and the hacker spies on that information. There would be a high possibility of your funds getting lost.

Downloading a VPN on your device can encrypt your information and assets. Even if you’re connected to a hijacked network, your safety is ensured. The app also makes users anonymous, ensuring that hackers find it difficult to track them or infect their computer with ransomware.

3.       Implement best practices to improve cybersecurity

To protect your device from ransomware, make sure you install updates for your software the moment they become available. You also need to install anti-malware software to protect you from ransomware that might sneak onto your system.

One of the most significant ways ransomware can get onto a computer is through email attachments. Avoid opening emails from senders you don’t know.

4.       Use Cold Wallets

Cold wallets are always offline unless you connect them to the internet. If your crypto wallet is offline, hackers will find it impossible to steal your funds. Instead of using a cryptocurrency exchange, you could use a hardware wallet.

Final Thoughts

Cybercriminals have stepped up efforts to lay their hands on increasingly valuable cryptocurrency. They use various methods like ransomware, infected emails, and online exchange attacks.

To protect your hard-earned funds, make sure you use a VPN, create several private key backups, use cold wallets, and follow cybersecurity protocols.