Security Concerns with Wallet and Cryptocurrency

Investing in cryptocurrency or a digital currency in general will be the norm for more people in the future. There will be less physical wallets and more digital wallets in the years to come.

A cryptocurrency wallet has been said to be a safe place where you can store your proof of ownership of the cryptocurrency you purchased, but it is really? Companies such as Robinhood, Paypal, Venmo and others allow you to buy bitcoin and other cryptocurrency quickly and easily but, is it safe? Putting money into your digital wallet means you have trust in the companies you are storing your cryptocurrency with and you want them to secure it, protect it and hold it until you are ready to use it right?

First, lets quickly discuss what cryptocurrency is. Cryptocurrency is a online payment system that does not rely on banks to verify transactions. It’s a peer-to-peer system according to Kaspersky that will allow anyone to send and receive transactions from anywhere. Cryptocurrency can be held in a wallet and there are two different types of wallets that exist in the crypto world.

Cryptocurrency wallet types (hot vs. cold):

Hot storage (software) wallets have online storages that are seen as less secure, making it not as safe to use. Cold storages (hardware) wallets on the other hand, are said to be more secure, quick and easy to connect to the internet with for fast transactions and good for holding large amounts of storage for any length of time.

Using a hot storage (software) wallet like Exodus, will allow one to apply a 12-word password phrase that protects the cryptocurrency assets. The software can be used on multiple operating systems such as Mac, Windows and Linux and there are also app options to choose from in the Apple and Google Store. The app option also allows for easy transactions and the cryptocurrency type is not limited to which app you can use because the software allows for multiple types of cryptocurrencies and even US dollars (for some).

Using a cold storage (hardware) wallet like Trezor, will help provide additional protection. It runs on a desktop vs. the web. It supports thousands of coin and token transactions. It works directly with the companies exchange network using a USB connection. Another feature it uses is a microSD, a microSD can be used for added encryption protection on the storage. Bluetooth is not supported on the hardware to reduce bluetooth attacks such as bluesnarfing or bluejacking. All in all making it more secure.

Best practices recommended:

  • Invest in a hardware (cold) wallet for offline storage
  • Use a non-custodial software wallet or app.
  • Use a secure internet connection
  • Maintain multiple wallets
  • Secure your personal device
  • Change your password(s) regularly
  • Reduce your chance of being phished by not clicking on unknown sources and etc.

By using a cold wallet you will not have to worry about a cyberattack as much compared to a hot wallet since the cold wallet is not internet based. The cold wallet will allow you to store private keys and it comes with encryption to keep the keys secure. By using a more secure connection, you will reduce your chances of the transaction being compromised. It’s also recommended to use a VPN to avoid being targeted and to increase security with the transaction process. By maintaining multiple wallets, one can diversify their cryptocurrency investments. Using one wallet for daily transactions and the other one or so for separate tasks will help reduce the amount of coins or tokens loss. By using a secure personal device, one can help reduce their exposure to new vulnerabilities. Using a strong anti-virus and firewall on their device will better protect their cryptocurrency in general and it will help reduce a malicious attacker’s access to your wallet. By changing your password regularly, using a strong password and opting for multifactor authentication you can provide a safe environment for your cryptocurrency. Last but not least, reduce your chances of getting phished by avoiding ads on the cryptocurrency websites and other sites as well as avoid going to unknown links or attachments in emails and watch for fake domains within an emails by checking the senders email address thoroughly.

Overall, having a crypto wallet can be safe if you ensure you do the following: make sure it is stored offline using a hard wallet, make sure it is connected with a secure connection or no connection at all, make sure it is being used on a secure device such as a desktop or phone with a strong anti-virus, firewall, a VPN and your password is changed regularly with multi-factor authentication enabled. Also, make sure you avoid clicking on websites with ads or using links or attachments from unknown sources and always check the domain of a senders email to reduce your chances of being phished in any type of way.

Resources:

https://www.kaspersky.com/resource-center/definitions/what-is-cryptocurrency

https://www.cnet.com/personal-finance/crypto/the-best-bitcoin-and-crypto-wallets/

https://cisomag.eccouncil.org/cryptocurrency-wallet-security/

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