Top Tips to Secure Your Cryptocurrency Holdings in 2022
After Bitcoin was first released in 2008, cryptocurrencies have become increasingly popular across the board, with newcomers to the crypto-verse just as likely to dabble as those who have been involved since digital coins first appeared.
No matter where you are on your investor journey - be it crypto newbie or pro - your security practices and habits are essential.
We’ve all read the horror stories about people making their fortunes with cryptocurrencies, only to lose them just as fast courtesy of a data breach, a lost security key, scams, or poor digital hygiene practices.
With that in mind, we’ve put together a list of top tips to help you protect your crypto assets in 2022 and beyond.
Pick Passwords That Are Passable
Your password practices could make the difference between hackers easily gaining access to your exchange account or wallet or remaining locked out safely. Did you know that around 70% of the world’s most commonly used passwords can be cracked in less than one second?
And with the NZ Financial Markets Authority (FMA) warning that “cryptocurrencies, crypto-exchanges and the people that use them are often the targets of hacking, online fraud, and scams”, it only makes sense to ensure your password hygiene practices are passable:
- Use long passwords (the US National Institute of Standards and Technology (NIST) recommends a minimum length of 15 characters, while CERT NZ recommends a four-word passphrase)
- Use complex and unique passwords; don’t include any personal information in your password, don’t use common passwords (like “password”, “qwerty123”, or worse “, 123456”), and don’t use previously compromised passwords
- Make your passwords complex with a mix of upper and lowercase letters, numerals, punctuation, and special characters
- Use a different password for every account you hold, and make sure your crypto passwords aren’t being used with other accounts.
Using passwords that are not passable is the digital equivalent of shooting yourself in the foot. The market can be volatile and risky, don’t increase this risk by allowing additional threats against your accounts.
Choose Your Wallet And Exchange Providers Carefully
If you’re new to crypto, note that you’ll need a digital “wallet” to store your currency and an account with a cryptocurrency exchange to purchase or trade cryptocurrencies. Some exchanges, including BitPrime, allow you to use “fiat” currency, such as New Zealand Dollars, to buy cryptocurrency.
Because exchanges handle your financial information and sensitive data such as your credit card number, it pays to choose an exchange carefully. When selecting an exchange, consider:
- Security standards
- Independent reviews from users
- Where it’s located or headquartered
- Whether it’s a registered business. For example, BitPrime is registered on the NZ Financial Service Providers Register (FSPR).
Likewise, you’ll want to choose a wallet provider with an excellent reputation, robust security standards, and customer support (just in case it's needed) in your country.
According to an InsideBitcoins report, more than NZD16,000,000,000 worth of cryptocurrency was stolen between 2011 and 2019, and the majority of this was from wallets. We covered wallet security in more depth in this post, but here’s what to look out for when choosing your wallet or wallet provider:
- Is it a “hot” wallet or a “cold” wallet? The former is generally free and hosted online, but this carries risk as it’s online and could be targeted by attackers. On the other hand, the latter is offline and can be more secure
- If you’re using a free online hot wallet service, what are the company’s security standards like, and do they have a long history of data breaches and unfortunate incidents?
- Is the provider authentic, and have they been around long? You’ll want to avoid any fly-by-night providers.
Exercise A Healthy Degree Of Suspicion
Because crypto exchanges, wallet providers, and people who hold crypt assets are so frequently targeted, it pays to be suspicious of trading or investment opportunities. As CBS News recently noted, crypto heists are getting more ambitious, with more than US$1 billion lost in 2022 already.
Just as threat actors deliberately target decentralised finance (DeFi) platforms with security vulnerabilities, they also target individual investors who display even the slightest level of potential as a target. For example, if you’re new to the world of crypto, you might ask a basic question on a forum, only to be approached via private message from a “helpful” stranger.
It pays to trust no one you meet online on crypto forums, nor the companies that might appear in your inboxes with amazing initial coin offering (ICO) offers, or those that send you semi-suspicious links via email.
Remember the old adage: if it looks too good to be true, it probably is. Sometimes, those promising new ICOs are for coins that don’t even exist - even if it seems like friends are urging you to invest.
Angela Boundy of Netsafe NZ told Consumer that the organisation is “seeing an increase in the reports of social profiles being hacked or socially engineered and then used to convince the friends, family or followers of that account to invest.”
She also noted a sharp spike in the number of reported cryptocurrency scams, with “nearly 400 crypto-related scam reports in the past 12 months, which is a significant increase compared to the previous year.”
Add Multiple Layers Of Security Whenever Possible
A strong password to secure your crypto-related accounts is an excellent start to better security and safety online, but it’s one part of the bigger picture. You should also add layers of security whenever possible:
- Opt for two-factor authentication (2FA) to further secure your accounts. You can use Biometric log-ins or tokens, but avoid SMS verification options
- Use full disk encryption on both your desktop and laptop computers and your handheld devices
- Make sure you backup your wallets regularly
- Minimise your exposure and risk as much as you can. For example, only keep a small amount of crypto in your hot wallets and the majority in cold wallets.
Cryptocurrencies are exciting, offer the chance for everyone to invest no matter their background, and are helping to pave the way toward an increasingly decentralised financial landscape. But security is an ongoing issue. Avoid becoming a statistic by following the tips we’ve outlined above.
The above references an opinion and is for informational purposes only. Do not take this as personalised financial advice or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.
Last updated: 03/06/2022