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Despite Bitcoin’s dramatic fall in value over the past few years, the alternative coin trading market remains strong and an increasing number of traders and investors are getting engaged in the crypto world for the first time.
Cryptocurrencies represent a secure way to complete transactions online, but this doesn’t mean that digital currencies are without risk. In many ways, the deregulated and decentralized nature of crypto trading that make it attractive to investors are the same factors that lure cybercriminals.
This year, amidst the ongoing COVID-19 crisis, there is a heightened threat level. The FBI has warned of coronavirus inspired crypto scams, so too has the Financial Crimes Enforcement Network (FinCEN).
One notable example is the July 2020 Twitter hack. A hacker, or several hackers, managed to gain control over the Twitter accounts of numerous public figures through “administrative privileges,” meaning they could bypass the password requirements. Using these accounts, the fraudsters asked for money in Bitcoin, ostensibly to help with COVID-19 relief. The accounts that were compromised included those of singer and one-time presidential hopeful Kanye West and the official Apple account. Many other high-profile accounts were involved.
Securing your cryptocurrencies in 2020 is a matter of two key things: solid digital hygiene practices and a suite of security tools and protocols. Unlike traditional currencies, when digital coins are lost or stolen, there is no recourse, which means security should be at the fore of every investor’s mind.
Here are some of the key steps traders and investors can take to keep their currencies secure:
Use a Virtual Private Network (VPN)
Data sniffing is a method of garnering information. Threat actors can monitor and then capture data packets as they are in transmission. If a private key, for example, is discovered in a sniffing attack, the cryptocurrency associated with that key is at severe risk of theft.
Crypto enthusiasts should always encrypt their data transmissions when they are actively trading, making a transaction, or logging in to accounts and wallets. Using a VPN for privacy is one of the easiest ways to both shield your internet activity from hackers and encrypt the information you send over the network.
Use MultiSig wallets
Choose wallets that offer multiple-signature (MultiSig) processes. These are far more secure than single log-in wallets and greatly reduce the risk of your wallets being compromised. MultiSig is also great when you have two or more people sharing an investment as you’ll each have one signature and access is only possible when all signatures are entered.
You can think of MultiSig as the digital equivalent of a door that only opens when both its separate locks have keys in and they are turned at the same time.
Educate yourself on current crypto scams
Scammers will always come up with new ways of discovering your information, and, by extension, your cryptocurrency stashes. Stay ahead of the curve by keeping yourself informed about the current scams making the rounds. Ensure you treat all ICOs and investment offers with distrust until you’ve verified the investment’s validity through your own independent research. Remember, if an offer seems too good to be true, it probably is.
Use both hot and cold wallets
Just as you keep the majority of your cash assets in the bank and just a little in your physical wallet to prevent loss or theft, you should do the same with your cryptocurrencies. Instead of keeping all your coins in a hot wallet, which is more susceptible to theft, you should invest in some secure cold storage options. Of course, there are risks associated with cold storage too so ensure your drives are encrypted and in a physically secure location.
Keep your wins to yourself
It feels really good to make a smart investment or trade and garner currencies. But shouting about it on social media or in forums is a bad idea because it draws attention to you. Threat actors are always on the lookout for the next victim and someone who has made good on crypto is a great target. Instead, keep any wins to yourself.