Bitcoin and other cryptocurrencies were developed as a way to counter distrust from centralized institutions and intermediaries. The irreversibility of transactions, decentralized system and highly sophisticated encryption were all designed to make the system unhackable and unalterable.
However, these expectations do not hold water anymore as the blockchain system has become prone to both human error and high tech criminals that are subjecting crypto investors to serious risks. As the number of users and the value of different cryptocurrencies continue to grow, so does the rate of security breaches against these assets.
Some of the risks associated with crypto trading and storing include:
There have been many cases of phishing exploits that aim to infect mobile wallet apps and other places where cryptocurrencies are kept. Most crypto phishing scams are sent through malware and Trojans. Usually, the hacker sends an email containing an attachment or link to a malicious webpage that once the user clicks, steals personal data like the private keys, which they can then use to sweep your account clean.
As an investor, you’ll store your coins in encrypted storage called digital wallets. Hot wallets store your coins online and can only be accessed using apps and web browsers. Cold wallets on the other hand store coins offline.
Cybercriminals create fake wallets, then trick crypto investors into downloading and installing the malware-infested wallet. Once you open the file, you’ll be given a fake registration form to fill in your personal data. And, before you know it, your coins will have been transferred to another wallet.
Sending Funds to the Wrong Address
Since crypto public and private keys are strands of letters and numbers, simply messing up one character is all it takes to send your coins to the wrong recipient. The problem is that a crypto transaction is irreversible, so there is no getting your money back once you send it to the wrong person.
How to Protect your Crypto Investment
Here are some of the methods you can use to protect your online investment.
Use a VPN
One of the best ways to protect your coins is by buying a VPN to encrypt all your online communication, making it inaccessible to hackers. This is particularly important if you are utilizing a network that you have no control over. This ensures that all your payment and transactions are anonymized.
Isolate your Investment
It is important that you isolate your online fortune by using a dedicated PC for transactions related to moving funds to and from your wallet. This will mean building an air gap around your device by ensuring that it remains without the internet whenever there are no transactions running.
Another way to isolate your computer is by ensuring that it can only be connected to the internet via another computer (gateway). Note that the dedicated computer should only be used for performing crypto-related transactions and nothing else.
Use Two-Factor Authentication
Two-factor authentication gives you enhanced security as you’ll have to authenticate your account twice: with a password and with phone number. You can either opt for email or SMS confirmation before gaining access to your wallet. Therefore, even if the hacker manages to obtain your password, they will not be able to enter your wallet without the email or phone.
It is obvious that despite it being a more secure way of transaction, trading and storing cryptocurrencies has its own risks. As an investor, it is your duty to look for ways to secure your online fortune.