Best Practices For Securing Your Crypto Assets

The cryptocurrency market and blockchain technology are evolving and growing rapidly. Today, the value of some digital assets can rival that of other tangible assets. This has attracted so many sophisticated cyber threats.

So, it is not surprising that safeguarding digital assets has become more critical than ever.  However, many crypto investors and traders are unaware of the security risks that follow them and how to secure their cryptocurrency. 

There is nothing more mortifying than opening your wallet one day and seeing all of your crypto assets gone without leaving a trace. As cryptocurrencies allow transactions without the help of a centralized third party, you would have no way to track the transactions or dispute them.

So, you should always employ caution and take all safety measures when it comes to handling crypto assets. Just keep in mind that no storage device is 100% safe and no dApps (decentralized applications) are 100% secure and that’s a start. 

Online Cryptocurrency Threats 

Before getting into safe practices for securing your cryptocurrency, let’s look at some online threats and thefts that have happened in the past few years. 

• Ronin Network Hack: One of the largest cryptocurrency hacks is the Ronin Network hack. The hackers stole $625 Million worth of Ethereum and USDC in 2022. The creators could only recover $5.7 million of the stolen funds, making this the largest crypto hack in history.
   
• Poly Network: Upon finding a security vulnerability in the Poly Network – DeFi platform, a lone hacker stole over $600 million. The hacker did it for fun and upon request from the creator of Poly Network, the hacker returned about $300 million.
  
•  FTX Theft: FTX was one of the top cryptocurrency exchanges, but it went bankrupt when its balance sheet got leaked suggesting that $8 billion was missing. The CEO of the exchange was imprisoned for his wrongful doings but the customers are still waiting for their money back.
  
• Binance Attack: About $570M worth of BNB tokens were hacked from the Binance cryptocurrency exchange. The hackers exploited a vulnerability in the smart contract and withdrew 2 million extra binance coins.
  
• Coincheck: Coincheck is a Japanese crypto exchange that became the victim of a theft of $523 million NEM coins worth $534 million at the time. However, the exchange survived the hack and it still stands as one of the top exchanges in the industry.
  

The above-mentioned attacks are just some of the major examples, you can see several examples in the news daily. According to reputable news sources, hackers have looted about double the amount in the first six months of 2024 than the same period last year. 

Explore More: Blockchain Guide: What Is It? How Does It Work?

How to Secure Your Crypto Assets?

The first step in protecting your cryptocurrencies is acknowledging that you need to be proactive in protecting your assets. With proper preventive measures in place, you can protect your assets to a great extent.

Let’s discuss some of the best practices you can follow to secure your cryptocurrencies and other digital assets:

1. Use a Combination of Storage 

Storing cryptocurrencies in an internet-connected digital wallet also called a “hot wallet” is convenient, especially for someone new to cryptocurrency. Hot wallets are typically free and you can access them instantly from your phone or computer. However, since hot storages are connected to the internet at all times, you run the risk of potential online threats. 

You can reduce the risk of losing your cryptocurrency to a great extent if you switch to cold wallets. They are specialized hardware devices that can hold various cryptocurrencies and digital assets. Even though hardware wallets may make it a bit inconvenient and time-consuming to access your cryptocurrency, it eliminates a lot of the potential dangers associated with hot wallets or software wallets. 

So, what you can do is use a combination of both a cold wallet and a hot wallet. Store the cryptocurrencies you need immediate access to, in a hot wallet and others in a cold wallet. For example, if you are using a portion of Slano for active trading and to use in dApps, store only the required amount in hot storage and transfer the rest to offline storage. 

2. Use Different Wallets for Each Purpose

You must be familiar with the old saying – “don’t put all your eggs in one basket”. You can literally apply this age-old saying to secure your cryptocurrency. Use multiple cryptocurrency wallets and assign each for different purposes.

For example a wallet address for airdrop, a different one for exchanges, another wallet for holding crypto long-term, etc. Through this method, even if a wallet becomes compromised, you will only lose the cryptocurrency left in that wallet. 

3. Activate 2FA

You should always activate two-factor authentication for not just your cryptocurrency but any application that deals with managing your online account. Many modern exchanges and wallets allow you to enable 2FA for your safety.

It ensures an extra layer of security such as sending you a one-time-code to your phone number or email address every time you log in. This makes it harder for hackers to get into your accounts. 

4. Stay Away From Phishing Attacks

Always stay vigilant and cautious against phishing attacks. Hackers often use the technique of phishing to scam you into giving away your login information such as your username, password, and even one-time passwords (OTPs). 

You can stay away from these attacks by being aware of the tactics they use. Phishing attacks usually lure in unsuspecting users by offering free rewards. If you are met with offers that seem too good to be true, oftentimes they are. Always verify the authenticity of messages you receive before giving your details to a website, verify the URL, and make sure it is the official link of a trusted platform, and not a scam. 

5. Keep Your Seed Phrases Safe

Crypto wallets give you a seed phrase or recovery phrase. If your device is lost, or the wallet got accidentally deleted, you need to know the seed phrase for recovering the cryptocurrencies. So, it is more than crucial to keep your seed phrase secure and protected from possible online thefts. 

Since it is prone to hacking, it is not recommended to store your seed phrases in your phone or computer, instead write them down on paper and keep it safe. For better safety, you can create a copy of it and store it in another location.

For example, keep a copy in your cupboard and another one in your physical wallet. If your crypto wallet contains a substantial amount of cryptocurrency, you can also choose to store the seed phrase in a bank locker for better protection. 

6. Use Strong Passwords 

You need to use strong and unique passwords to manage your accounts. Avoid using common personal information as passwords such as your DOB, address, etc. Instead, use a random word and add numbers, and special characters. You can also use a mixture of uppercase and lowercase letters to enhance the strength of your password. 

It is recommended to set passwords that are at least 8 characters long. The longer, the better. However, keep in mind that you should never use a password again for another account, which can potentially make it easy for hackers to guess your password. Also, it is best not to store your passwords related to cryptocurrency on your browser’s password manager. 

7. Use Dedicated Device for Cryptocurrencies

Though it may sound excessive, separate devices should be used for managing cryptocurrencies and other personal uses such as social media. It is best not to open unverified emails, links to social media platforms, and unsolicited documents on the device you manage cryptocurrency. By keeping your online presence separate, you can bring down the potential risk of losing crypto to a minimum. 

8. Avoid Public Wi-Fi

You need to ensure private and secure internet access when managing cryptocurrencies. Although a public Wi-Fi connection can be convenient when you are travelling, it might not be the best way to access your crypto possessions. Public wifi can be used to eavesdrop or track your activities, risking online theft. 

9. Use VPNs

Virtual private networks (VPNs) are security services that encrypt your data and mask IP addresses creating a virtually private network between devices. Though VPNs are not a hundred per cent effective, they can protect users from unauthorized tracking, and snooping. Use a trusted VPN service to secure your connections when accessing cryptocurrencies. 

10.  Enable Automatic Updates 

Updating your software including the operating system is important for getting the latest security patches. To ensure you are up to date with your updates, turn on automatic updates. By doing this, you don’t have to remind yourself to install new updates.

Also Read: Pros And Cons Of Hardware Vs Software Wallets

Conclusion 

As technology evolves, online threats and thefts are also increasing. Overall, the cryptocurrency market has suffered more than double the amount of thefts in the first half of 2024 than the first half of last year.

In this article, we have familiarized some of the best practices for securing your cryptocurrencies. They include using a combination of wallets, diversifying the crypto possessions, using dedicated devices, and keeping the seed phrases safe and secure among others.