Are cryptocurrency wallets safe?
Cryptocurrency seems to be the rave of the moment. Since its inception, it has grown rapidly from a few users to about 300 million users in 2021.
The market has grown so big that cybercriminals (as well as investors) find it attractive.
There have been so many hacks reported already. www.yuan-paygroup.com/ from a blockchain security firm revealed that cryptocurrency crimes have reached over $4.3 billion all over the globe.
This spells doom for the entire crypto industry. How should this be addressed? Well, major threats to your digital currencies come primarily through cryptocurrency wallets. As such, let’s look into what a crypto wallet is and how safe it is.
What is a cryptocurrency wallet and how safe is it?
A cryptocurrency wallet is either an app or a physical device that lets you store crypto and allows you to send or receive crypto transactions.
Just like our traditional currency, you do not need a wallet to spend your cash. Rather, you need it to keep it all together in a place.
When a crypto user acquires bitcoin, for instance, s/he can store it in a crypto wallet and then make transactions from there.
A crypto wallet comprises two key pairs: public keys and private keys. The public key serves as an address through which one can send crypto to the wallet.
Now, crypto wallets can have as many public keys as possible. This simply means you can give several public addresses out and use them for receiving crypto in your wallet.
The private key is a different thing entirely. It is probably the most important part of your wallet. It is also the part where novices get confused.
We can liken a private key to a safe – a strong cabinet used for storing valuables. Anyone who can access the private key of your wallet can take control of everything that goes on in there.
The private key is also similar to a bank account, the only difference is that you alone can control what goes on in there. The private key is used to initiate transactions. This is called ‘signing’
Cybercriminals have developed means of compromising digital wallets and stealing digital currencies without the knowledge of the owner.
This leads us to the main question, are crypto wallets safe? Well, your cryptocurrency wallet is as safe as you want it to be. Taking extra precautions can prevent you from losing your precious coins.
Here are a couple of things to do to keep your wallet safe:
- Use a Cold Wallet
Cold storage simply means that the wallet is not connected to the internet. As a result, they are not prone to attacks. This looks like a USB key that you plug into your computer system which then allows you to access your exchange.
Hot storage on the other hand means that the wallet is linked to the internet and can be used to pay for things directly as well as get new cryptocurrencies.
Using a cold wallet to store your private keys is a very viable means of keeping your keys safe from cybercriminals.
Sometime in 2019, BITpoint – a Japanese exchange company discovered an illegal withdrawal of $32 million from its hot wallet.
The company has 5 currencies in its hot wallet: Bitcoin, Ethereum, Bitcoin Cash, Ripple, and Litecoin. However, it noted that the cold wallet was not affected.
- Utilize Secure Internet
When making online business transactions, use only secure internet. Never use public Wi-Fi. This is because data that passes through an insecure network connection can easily be intercepted.
You should also play safe when accessing your home network by getting a VPN for an extra layer of security. The VPN changes your location as well as your IP address. It also keeps your browsing activity private and safe from black hat hackers.
- Change Your Password Regularly
We can not overstress how important a strong password is to the safety of your wallet. Several folks use weak passwords. To worsen things, they use the same passwords on over 10 devices.
Although this makes it easy to remember your passwords, it is risky. Cybercriminals will find it easy to breakthrough. As such use different passwords for different wallets. Also, opt for multi-factor authentication.
In Conclusion, you have a role to play in the safety of your crypto wallet. Stay up to date with the latest security news and act accordingly always.