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5 cryptocurrency security practices: How to protect your Crypto from hackers

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Image Credit: Lvivity

Since the inception of Bitcoin in 2009 and its subsequent increase in value, cryptocurrency has secured a major position as one of the trending topics in the blockchain industry— and by extension, the field of technology.

Although, the blockchain technology upon which cryptocurrencies are developed, is designed to be a highly encrypted decentralized structure with immutable records which are often immune to cyber attacks; the advancement in technology has largely threatened this seemingly unhackable structure. Hence, the protection of your cryptocurrency should be amongst your top priorities.

However, before analysing the best security practices to ensure that your cryptocurrencies are well protected from malicious attackers, it is pertinent to highlight the interrelationship between cryptocurrency and security.

Blockchain, Cryptocurrencies And Security

While the cryptocurrency space is growing at a commendable rate, the core elements needed for its success are the protection and storage of digital coins. The blockchain network provides the needed protection for users; whilst wallets and digital exchange platforms, offer storage services and facilitate transactions.

Blockchain technology makes extensive use of the public key cryptography in order to provide a transparent and publicly accessible ledger that allows users to securely transfer the ownership of units of value, with proof of work methods. To achieve this, it uses a decentralized consensus to maintain the network, thereby, sealing its security, as the proliferation of the network would make it more decentralized and less prone to hacks.

Security Practices To Prevent Hackers

Cryptocurrency security should start with basic cybersecurity. With cryptocurrency worth over $4billion having been stolen in previous years, having the knowledge to safeguard your currency from attackers, is particularly germane.

Some of the best security practices to employ in order to safeguard your wallet from hackers are:

1. Make Regular Backups of your wallet

In every aspect of this technology era, the importance of backups cannot be overemphasized. The same applies to cryptocurrency wallets. A backup of your wallet can protect you against computer failures and many human mistakes. It could also afford you the opportunity of easily recovering your wallet in circumstances where your phone or computer is stolen.

Some wallets use many hidden private keys. If you only have a backup of the private keys for your visible Bitcoin addresses, you might not be able to recover a great part of your funds with your backup. Therefore, it is recommended that you undertake a full backup of your wallet.

Regular backups are essential to protect against computer failure, theft and human errors. For most use-cases, the 3-2-1 rule for backups should be followed; three copies, two different media items and one off-site. That could mean keeping your private keys on:

  • Hardware wallet.
  • CD or flash drive.
  • Paper wallet.

This connotes three versions stored on at least two different devices or media.

Next, you should keep one off-site backup in a remote location or a bank deposit box at a trusted bank.

Remember that you should always encrypt your backups. If you back up a wallet file and a malicious attacker gets a hold of it, your currency would immediately become theirs to steal.

2. Enable Multi-Factor Authentication

Multi-factor authentication (MFA) is an additional security layer for your wallets. It helps to address the vulnerabilities of a standard password-only approach. It prohibits access to services until a user successfully presents two or more pieces of evidence (or factors) to an authentication mechanism. They usually comprise: knowledge (something the user and only the user knows), possession (something the user and only the user has), and inherence (something the user and only the user is).

Two-factor authentication (2FA) is the most used MFA. It requires only two factors to authenticate users. If enabled on your crypto wallets, you would need another factor such as a PIN or One Time Password (OTP) in order to log in with your username and password. The authenticator is usually on a secondary device like a mobile phone or a USB key. This makes it virtually impossible for an attacker to siphon your wallet tokens even after breaking the first security layer without the authenticator.

3. Use multiple wallets

Your wallets save your keys, which is the access way to your cryptocurrency. Should a breach occur, having a single wallet would be quite disastrous. You have to treat your wallet the same way you would treat a real leather wallet.

Therefore, it is recommended that you use at least two wallets— a hardware wallet for storing your coins and a hot wallet for storing a small amount of coins on a computer or mobile phone for everyday transactions.

Hardware wallets are the best balance between very high security and ease of use. These are little devices that are designed are like an external hard-drive designed specifically to store cryptocurrency. They do not allow software installation, thereby, making them very secure against computer vulnerabilities and online thieves. Because they can allow backup, you can recover your funds if you lose the device. Some of these are even designed to facilitate transactions without the keys leaving the hardware.

A hot wallet (one connected to the internet) is great for day-to-day transactions, but they are easier to steal from. However, keeping all your currencies in a hot wallet, is essentially asking for trouble. As such, opting for a hardware wallet as the major storage method, is a better and safer practice.

4. Encrypt Your Data Always

If you are creating a backup of your crypto wallet, you have to encrypt it. In fact, should you be storing sensitive data, you would be better off encrypting it.

Any backup that is stored online is highly vulnerable to theft. Even a computer that is connected to the internet, is vulnerable to attacks by malicious softwares. As such, encrypting any backup that is exposed to the network is a good security practice.

Encrypting your wallet or your smartphone, helps protect your currencies against thieves by allowing you to set a password for anyone trying to withdraw any funds.

However, whilst setting up encryption, always remember to use strong and complex passphrases that you can easily remember, as forgotten passphrases may result in the total loss of your coins.

5. Stay Private

Cryptocurrency is often perceived as an anonymous payment network; but in reality, it is probably the most transparent payment network in the world. Some tips to consider to ensure your privacy whilst using cryptocurrency are:

  • Stop making mention of your cryptocurrencies trade exchange on social media networks. It makes a you a potential target for hackers.
  • Use only private or secured networks to conduct your transactions.
  • Whilst checking or moving crypto around, make sure your devices are secured with updated anti-virus softwares, in order to hinder people from tapping into your data and reading the keys you type.

Securing your cryptocurrency is a complex and time-consuming process, but it is worth the trouble— especially for anyone with a reasonable amount of cryptocurrencies. Always remember that it is your responsibility to adopt good practices in order to protect your privacy because you are practically your own bank; and protecting your money comes with great responsibility.

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Bitcoin

Bitcoin.org gets hacked, scammers run BTC giveaway scam

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Earlier today, Bitcoin.org, the oldest cryptocurrency website registered by the founder of Bitcoin, Satoshi Nakamoto, recently got hacked. Scammers ran a BTC giveaway scam with a promise to return double the amount users send to the named address. In the end, the scammers were reported to have collected $17,764 before the website was taken down. The website was inaccessible for a few hours after the incident, but normal service has been resumed.

To bring users’ attention to the hack, a pseudo-anonymous Twitter account with the name Cobra took to Twitter to reveal the news and claimed that the website may be offline for some days. He also clarified through his tweets that Bitcoin.org has never been hacked and that the breach must have been due to a lapse on the part of Cloudflare- the web provider that the website is hosted on.

“Bitcoin.org hasn’t been hacked, ever. We move to Cloudflare, and two months later we get hacked. Can you explain where you were routing my traffic too? Because my actual server didn’t get any traffic during the hack” he tweeted.

The scam on the website was perpetrated through a giveaway. Visitors on the website were greeted with a popup, asking them to send crypto to a Bitcoin wallet via a QR code and receive double the amount in return. The fake message showed that the Bitcoin Foundation was giving back to the community and that the giveaway will be limited to the first 10,000 people. This was made to draw more people into the scam.   According to an analysis on the scam address done by Reddit Sleuth, it was presumed that a chunk of the 0.4BTC came from the scammers themselves to add an element of credibility to the claim. At the time of writing this report, Bitcoin.org is once again, back to life.

How popular is the Bitcoin giveaway scam?

Bitcoin giveaway scam is quite popular among hackers as it allows them to make fast money without tampering with anyone’s wallet. In 2020, Twitter handles of top crypto celebrities, politicians and influencers were hacked to run Bitcoin giveaways. While the scammers were apprehended, the value of Bitcoin was not affected.

Today’s scam on Bitcoin.org did not affect the price of the coin either. Despite the Evergrande debt crisis and the fluctuations bedevilling the crypto market within the week, Bitcoin increased by 2.05% within the last 24 hours, thereby moving from $42,789 to $44,378.

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Crypto prices drop as global market fear increases

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Top cryptocurrency prices have fallen amidst a drop in stocks and fears over China’s Evergrande debt crisis. In the last 24hour, Bitcoin dropped from $47,772 to $42,630 shedding about 8.58%. this is the lowest in price since another bull run began on Sept 5 after the April crash.

El- Salvador’s President, Nayib Bukele sees the fall as an opportunity to invest more. Recall that the country adopted Bitcoin as a legal tender on September 7. Despite the adoption, the price of Bitcoin has fallen by almost 14% since then.

Other coins have experienced dramatic crashes within the last 24hours. Solana, a coin that has experienced 355% growth within the last 3 months fell from $162 to $130 shedding about 11.39% within the last 24hours. Solana’s fall may be categorized by the 17-hour outage which the founder, Anatoly Yakovenko said was caused by bots “flooding the networks”

Ethereum fell by 9.37% while Dogecoin and Axie Infinity fell by 11.22% and 14.14% respectively within the last 24hrs hours. While crypto experiences dark Monday, El-Salvador keeps investing more money in Bitcoin.

A look at the global market

The global market is experiencing fear due to the Evergrande debt crisis. A report published by the University of Michigan shows that consumer’s sentiment is beginning to decline. This trend alone may impact the crypto market as well.

On the other hand, the global market downturn must have been spurred by the Evergrande debt crisis. The company grew to be one of China’s biggest companies by borrowing more than $300bn. Last year, Beijing made rules to control the debt owed by big real estate developers. This led Evergrande to offer its properties at major discounts to raise more money to keep the business afloat. Right now, the company is struggling to meet the interest on payment of debts.

Why would it matter if Evergrande fails?

The collapse of the multi-million dollars company would affect the global market; including the crypto market. Many people bought properties from Evergrande and they expect to make gains. If Evergrande falls, crypto investors will be forced to withdraw more money to keep their business running without the means to invest more. When one business fails, the other gets affected indirectly. This also applies to other firms that do businesses with Evergrande.

The potential impact on China’s financial system is another effect of Evergrande’s fall. In his statement to BBC, Mattie Berkink, the Economist Intelligence Unit (EIU), said that “the financial fallout would be far-reaching. Evergrande reportedly owes money to around 171 domestic banks 121 other financial firms” if the company fails, other lenders or businesses may be forced to lend less. Thereby leading to a credit crunch- a situation where companies struggle to borrow money.

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Bitcoin

El Salvador’s Bitcoin adoption – What you need to know

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El Salvador made history (and headlines) after becoming the first nation to endorse and approve the world’s most popular cryptocurrency, Bitcoin, as a legal tender. The move makes Bitcoin acceptable for transactions within the Central American country alongside the U.S dollar, which has been serving as the paper currency since 2001. This comes after the so-called “Bitcoin Law” came into force after passing legislation in June of 2021. El Salvador’s government announced that it had purchased 400 Bitcoin in 2 tranches of 200 each and plans to get more in the future.

The move to adopt Bitcoin has been justified by the government’s need to boost financial inclusion in the country. It is estimated that 70% of El Salvadorans do not have access to financial services and the government believes that Bitcoin can help close the gap. The Bank of America has outlined a few benefits that they believe will result from El Salvador’s bitcoin adoption. These include promotion of financial digitization, streamlining remittances as well as opening the country to digital currency miners. However, not all agree that the move is a step in the right direction.

Amongst the detractors of the scheme are the International Monetary Fund and the World Bank, each having warned El Salvador about the risks of Bitcoin’s use as legal tender. The World Bank has been irked by what it described as “environmental and transparency shortcomings” with bitcoin, while the IMF cited “economic and legal concerns” in relation to the move.

Other than the push back from these international bodies, there has been some internal opposition to the adoption of Bitcoin. Citizens had held protests over Bitcoin’s adoption in August and about 67.9% of respondents in a poll said they disagreed with the government’s decision to adopt crypto. The results of the poll showed that 8 in 10 people had little confidence in the use of bitcoin as the currency.

In spite of the criticism, El Salvador’s government is moving forward and has reportedly installed 200 Bitcoin ATMs across the country. And in response to the World Bank’s environmental concerns, El Salvador’s president, Nayib Bukele, has said the country plans to power mining activities using renewable energy from the country’s volcanoes. In order to incentivize the use of Bitcoin in the country, any citizen who signs up for the country’s “Chivo” wallet will get 30$ worth of bitcoin.

All in all, the adoption of a cryptocurrency by a sovereign nation is seen as a testing ground for many, as this is a use case Bitcoin has never experienced in its 12-year history. Countries such as Brazil and Panama seem to be watching the move to draw insights on whether to follow suit.

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