Best ways to protect your crypto wallet

November 08, 2018
Darya Karatkevich

Whenever there is something valuable in a computerized platform, hackers are going to be working overtime to find ways to break in and take it. The allure of all the funds invested in cryptocurrency around the world, sometimes stored in less than secure wallets or exchanges, keeps hackers busy trying to take the digital currency for themselves.

Secure crypto wallet
One of the main strengths of blockchain technology is security, because the information is stored in a decentralized manner across all users’ storage. Therefore it’s impossible for a hacker to just steal the currency out of the blockchain, yet many people don’t consider other vulnerabilities outside the chain.

Watch your wallet

Major vulnerabilities are associated with the digital wallet you’re likely using to store your cryptocurrency. Personal data and even your personal key can be stored at the provider level, meaning that if your provider is hacked, your crypto could be withdrawn without your consent and gone forever.

In July, it was reported that a scheme was discovered targeting 2.3 million bitcoin users by gaining access to their clipboard. The process, which runs in the background of a victim’s system, would substitute a pasted bitcoin address for the one intended by the user. If they didn’t manually check and compare the address, the funds could be gone forever.

Users are often cutting/pasting addresses to buy bitcoin with a credit card, or transfer bitcoin between exchanges. These transactions are vulnerable to this sort of hack, and it’s not that difficult to pull off.

The security threat is at the provider level, so choosing the right one is critical. There are so many digital wallets and exchanges to choose from, so you have to do serious research to understand their security risks. The trading platforms where users’ account assets are actually protected by the blockchain itself, are considered to be the most secure, but there are others with a lesser degree of user data protection.

Some of the information that can be easily tracked by a provider includes web history, searches, and even keystrokes. Further, some software used by marketing companies includes services that allow the researcher to actually see what the user sees. That makes the secure private keys generated by wallet users not very secure at all.

All this data that collected by your wallet or exchange provider, and the information captured from your computer for marketing purposes, can leave you vulnerable to a possible theft. There’s a real risk that your secret key can be discovered, either by a hack of the provider’s servers or by an insider.

So what is the safest bitcoin wallet, and what are some techniques to help keep your crypto investment safe? Let’s take a look.

Choosing secure crypto wallets

Bitcoin wallet

There are so many bitcoin wallets out there, and it’s really hard to know which one is the best to use. Some are very simple, and others are full of features. To make things even more difficult, there are also hundreds of ‘blog’ posts telling you which wallets are the most secure. Many of these are ploys to get people to use unsafe wallets, so we’re going to avoid speculation on what the most secure wallet is, and focus on the security features and strategies you should be thinking about.

Cold storage

The most secure way to store your crypto is off the web altogether, in something called cold storage. It’s a good practice to have two (or more) wallets, one to facilitate trading and another to store longer-term investments or gains. There are many cold storage devices available that allow you to keep your coins safe, and since it’s a hardware solution there’s less risk of your key being stolen. It’s also a good practice to keep the key stored offline, preferably broken up into 2-3 parts for added security.

Two-factor authentication

Always enable two-factor authentication (2FA) if your wallet allows it. 2FA is simply a double authentication of your identity. 2FA comes in a few different flavors – Google Authenticator app uses a 6-digit code which is constantly changing and is unique to you. Another option is to add biometric identification like a fingerprint or retina scan. Regardless of which type, 2FA is critical to increasing the security of your wallet.

WiFi security awareness

You definitely need to be careful about what network you join when you’re using a device that has a wallet on it. Unreliable public WiFi networks can easily put your wallet at risk. It’s also critical not to leave your device unattended, or lend it to someone you don’t trust.

Double-checking the address

This may seem elementary, but always double-check the address after you cut/paste it into whatever application you’re using. Hackers will constantly be working on this vulnerability, and the best defense is to manually check it. It’s also a good practice to start with a small, trial transaction and verify success before doing a larger transaction.

Checking your locks

When using a web-based wallet, it’s important to ensure that there is an SSL security mark in the address window of your web browser. This stands for ‘Secure Socket Layer,’ and it ensures that your browsing is encrypted. The URL will begin with HTTPS instead of HTTP, and you should see a lock symbol next to the URL.

Practicing safe service

Need to take your device into service? Make sure you move any funds off a device before you take it in there, and make sure any critical security information is not accessible. It’s also a good idea to rotate wallets often, always researching which ones are most secure.

Phishing scams protection

Email phishing attacks are some of the simplest ways for hackers to gain access to your personal data and eventually your wallet. Make sure you know how to spot such an attack, and never enter personal information unless you’re 100% sure about who you’re sending it too. Phishing attacks are getting more and more sophisticated, so be alert. One simple technique is to always make sure the wallet URL is correct, sometimes it’s just one misplaced character that can expose you to theft.

Leaving auto updates off

Sometimes updates to wallet apps can expose you to security risks. A patch to the software might open up a breach, or cause data to get lost or corrupted. It’s best to let others be the guinea pig and wait until you know it’s safe to update. It’s possible to lose your currency even without it being stolen.

No public emails

Our main email addresses get used for many different things, and sometimes are published in many different places around the web. Those of us who have been using the same one for years might have signed up for hundreds of newsletters, blogs, and e-commerce sites. Choose a secure email address for your crypto accounts, preferably one with two-factor authentication.

Security is up to you

There are many ways to help keep your digital currency investment safe. Most of all, it’s important to just be proactive with the information you share. The inherent security in cryptocurrencies will keep your investment safe, but it’s up to you to keep all your account information and access safe. Choose secure, proven digital wallets and exchanges, preferably ones that keep critical information in the blockchain as well. Where possible, store your funds in a secure, offline wallet.

Hackers will not stop trying to get access to digital currency, but it’s up to us to work on keeping our investments safe. By doing our due diligence, we can help make the industry safer for all.

Post written by Darya Karatkevich
Darya is a blockchain market observer with 5+ years of experience as an author and editor for major tech blogging platforms. Her fortes are blockchain technologies and solutions, cryptocurrencies and crypto-related regulations.

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