Some scams are easy to see, but others might look like a worthwhile investment opportunity. Here are some crypto red flags to look out for.
Crypto wallets are digital wallets that are used to store, send, and receive cryptocurrency like Bitcoin. They are similar to a physical wallet in their concept – they store funds securely – but instead of storing cash or credit cards, they exist only online and they store digital currency.
There are many different types of crypto wallets, and each one has its own advantages and disadvantages. With the different wallets, there are also different levels and features of security that you can take advantage of to make sure your funds are as safe as possible. Here are five tips for securing your crypto wallets in 2022:
Use a strong password and two-factor authentication (2FA)
Just like with any other online account, it’s important to use a strong and unique password for your crypto wallet. A strong password should be at least 8 characters long and include a mix of uppercase and lowercase letters, numbers, and symbols.
In addition to a strong password, you should also enable two-factor authentication (2FA) on your crypto wallet. 2FA adds an extra layer of security by requiring you to enter a code from your phone or another device in addition to your regular password. With 2FA enabled, you’ll need to provide both your password and a one-time code generated by an app on your phone in order to access your account.
2. Hardware wallets are the way to go
If you’re serious about safeguarding your crypto, you should also consider using a hardware wallet – these are offline and this serves an important purpose.
As physical devices, hardware wallets store your private keys offline which means that even if your computer is hacked or infected with malware, your coins will still be safe. Not only is using a hardware wallet a great practice when it comes to investing, but also when it comes to security. Hardware wallets are the safest way to store your private keys, and as a result, your crypto. They became popular after Mt. Gox hack, when hundreds of thousands of Bitcoin were stolen from the online exchange.
Ledger and Trezor are two of the most popular hardware wallets on the market.
3. Back up your wallet
Keeping private keys offline means hackers cannot gain access across networks to get to them – and subsequently to your crypto wallet. However, it’s important to make sure that key is backed up – if something happens to it, you will lose access to your wallet and all of the funds in the account. To avoid this, you should make sure you have a backup of the private keys stored in a secure location. This will protect your wallets in case of emergencies.
4. Beware of phishing scams
Phishing scams are a dime a dozen in the crypto world. These scams usually come in the form of a text, email, social media message, or even a phone call. In the scams, a person will impersonate a reputable figure or organisation to try and gain access to your private keys. Phishing scams have grown in popularity over the past couple of years; with the rise of crypto adoption has brought the rise of malicious entities.
Some of the most popular methods used in phishing scams are:
- Creating a fake website that looks identical to a legitimate crypto exchange or wallet provider. Once you input your login credentials to the fake website, the hacker is given access to your account.
- Through the use of malicious links or attachments. These can often be difficult to spot, as they may seem to come from a legitimate source. Be cautious when clicking on any links, even if they appear to be from a trusted website or individual.
- Creating a fake mobile app that looks like a legitimate crypto wallet provider. Once you input your login credentials, the hacker then has access to your account.
The best way to combat these scams is to be vigilant and always double-check the authenticity of any message that you receive before taking any action. To avoid falling victim to a phishing scam, take careful consideration of the URL of the website you are on before inputting any sensitive information.
A good rule of thumb is to never click on any links sent to you via email or social media – unless you are absolutely sure that they are legitimate. If you are ever in doubt, reach out to the organisation or person directly through their official channels to confirm the validity of the message.
5. Avoid storing a large portion of your crypto on exchanges
Storing crypto assets on exchanges is a staple especially amongst crypto newbies. After all, it’s much easier to buy, sell and trade crypto when they are stored on an exchange. However, this convenience comes at a price as exchanges have been known to be hacked in the past.
While most reputable exchanges have implemented robust security measures to protect their users’ assets, it is still not advisable to store a large portion of crypto on these wallets. If you must, only store an amount that you are comfortable losing on the exchange wallets. A risk posed besides exchanges getting hacked is that your crypto might be jeopardised if the company that runs the platform is subjected to law enforcement regulation. This happened to the popular exchange Mt. Gox in 2014 when it was shut down by the US government. Many users of the platform lost access to their crypto wallets and were unable to retrieve their funds.
Why get a crypto wallet?
Cryptocurrency wallets are essential for anyone who wants to own or trade cryptocurrency. With so many different types of wallets to choose from, it’s important to select one that best suits your needs.
When it comes to security, always remember to never store your passwords or private keys on an exchange or online wallet. And, lastly, don’t forget to backup your wallets in case you lose access to them.