How to Secure Your Crypto Wallet in 2022: Most beneficial Security Tips

Crypto Wallet

How to Secure Your Crypto Wallet in 2022: Most beneficial Security Tips

Last Update: 2022-04-06

Securing your wallet. Probably the most secure way to store crypto offline is via a cold wallet.

How to Secure Your Crypto Wallet in 2022: Most beneficial Security Tips

Several cryptocurrencies, including Bitcoin and Ethereum, have gained popularity because of their multiple advantages over traditional currencies. One of their main advantages is they are secure as there is no record of any transactions. However, there have been many cases of investors and traders losing their crypto savings over the past few years, and the causes are varied.

It has become easy for hackers to attack crypto wallets and potentially steal crypto assets through hacked exchanges, improper private key management, and phishing scams. Unlike traditional banking, digital currencies are rarely refundable once they leave your wallet. So, it's essential to take all steps possible to guarantee the safety of your crypto holdings and secure your crypto wallets.

Let's get into our topic of what crypto wallets are and why you use them, the risks associated with crypto wallets, and how to secure your crypto wallets.

Crypto Wallets: What Are They, and How Do They Work?

A crypto wallet is a digital storage method for storing digital currency. You need a Bitcoin wallet best suited for your operating system or device before receiving, storing, or sending Bitcoins. These wallets may be physical or software-based. 

Since Bitcoin is a digital currency, no actual Bitcoins are stored in a wallet. Instead, a wallet holds a private key–a unique digital code known only to the wallet's owner. This private key connects you, the owner, with a public key or series of public keys.

A user's cryptocurrency is not at risk through the blockchain but rather through the wallet or exchange provider. The provider can track and store personal information, including your private key. Hackers can access this, enabling them to steal your crypto assets.

Since the number of people using cryptocurrency is rapidly growing, competition between different digital wallets has increased. Because of this, it's becoming crucial that users select their crypto wallets carefully. 

Types of Crypto Wallets

Cryptocurrency wallets, based on private keys, can be categorized into two types: hot wallets and cold wallets.

  1. Hot Wallets: It's faster and easier to trade or spend crypto using a hot wallet because it's connected to the internet. However, it may become vulnerable to online attacks.
  2. Cold Wallets: Cold wallets are usually not connected to the internet, so they are less convenient than a hot wallet, but they are more secure.

Which Kind of Wallet Is Right for You?

To invest in cryptocurrencies over the long term, you will need a hot wallet for trading on exchanges and a cold wallet for storing coins. While both types of wallets are generally considered more secure than storing crypto on the exchanges where you buy it, there are many factors to consider before choosing what is best for you.

In addition to offering a more convenient user experience, hot wallets are often linked to cryptocurrency exchanges, making it easier to transfer your holdings than with cold wallets.

Due to their offline nature, cold wallets are considered more secure than hot wallets and are the best option for long-term holdings. However, despite its high cost, you'll need a secure cold storage system sooner or later to protect yourself from both physical and virtual theft.

Best Crypto Wallets:

The most important thing you should do before investing in cryptocurrency is to have the best crypto wallet in place.

Following are some of the best crypto wallets of all time.

Hot wallets Cold wallets
Elecrrum Trezor Model T
Exodus CoolWallet Pro
Mycelium Safepal S1
Coinbase Wallet Ledger Nano S
Robinhood/td> Keystone Pro
Edge Wallet ELLIPAL Titan

Tips To Secure Your Crypto Wallets

Since digital currencies only run electronically, cryptocurrency holders and traders are particularly vulnerable to cyber-attacks. Below are some tips for preventing your cryptos from being hacked.

  1. Use Multisignature Wallet

The multi-signature or multi-sig method of storing crypto is one of the most secure methods. It is beneficial for crypto-asset owners with thousands of crypto assets since it prevents unauthorized transactions.

You cannot withdraw funds from your multi-sig wallet without creating a transaction and signing it. Signing or approving a transaction means that you own the assets and have the authority to deal with them. The wallet also requires the signature of one or more co-payers before funds can be transferred from the wallet. It provides an extra layer of security to your funds.

Multisig wallets might not be ideal if you typically make crypto transactions because you must get multiple signatures every time you want to transfer money. Instead, you can use two-factor authentication.

  1. Two-Factor Authentication (2FA) To Protect Your Wallet

Hackers can gain access to your crypto by stealing your credentials, causing you to lose the crypto you own. Hence, to safeguard your crypto, use two-factor authentication. Besides providing an extra layer of security, 2FA adds convenience and ease of use.

The 2FA feature on your crypto wallet will send you a code every time you log in. It means you will need both your login credentials and a code.

Also, the code changes continuously and has a specific validity period. By using this method, even if hackers obtain your login credentials, they will still be required to enter your 2FA code to access your account. You can receive the two-factor authentication code via SMS or email or through authentication apps like Google Authenticator.

If you make frequent crypto transactions and don't want to use a multi-signature wallet, you may find it helpful to have 2FA.

  1. Back-Up Your Wallet’s Private Keys Multiple Times:

Taking the time to back up important digital files and data can be critically important, and the same holds true for your crypto wallet's private keys. Experts recommend duplicating your wallet's private keys three times. Keep two of them in different secure locations that you can never forget. The third one should be kept close to you. Therefore, even if your wallet's private keys are lost, you will have two other backups to access your crypto assets. The alternative is that you will lose all your crypto assets if you lose your private keys. So, having multiple backups is preferable to none.

  1. Keep Your Wallet Encrypted

Encrypting your wallet can also help you ensure that no one will be able to steal funds from it without your knowledge. However, be sure to remember your password if you encrypt your wallet. When creating your password, use both numbers and alphabet characters to ensure that the password is as secure as possible.

It's better and safer to enter your passwords on your own devices and your own network rather than using public computers and Wi-Fi networks. It poses a risk for phishing attacks.

  1. Don’t Fall Victim to Phishing Attacks

Besides, you should also be on high alert for phishing attacks to safeguard your wallets. Hackers, just like thieves, are always searching for new ways to steal cryptocurrency.

Hackers are always coming up with new ways to steal your crypto assets. Thus, it is vital to know how hackers work and how people commonly lose their cryptocurrency due to getting scammed online.

To avoid being phished, you should:

  • Don't click on unknown or suspicious links.
  • Don't be fooled by ads that sound like impossible deals.
  • Never disclose your cryptocurrency's personal information.
  1. Make Sure You Only Use a Secure Internet

It is estimated that one out of every three people suffers a cyberattack every day. Most of these attacks are carried out by devices connected to an insecure internet.

So, your cryptocurrency is at risk when connected to an unsecured internet connection.

To protect yourself against these attacks, you should consistently use secure internet connections when submitting your cryptographic data and avoid insecure connections such as those provided by public Wi-Fi. A VPN can improve the security of your cryptography. A VPN allows you to change your device's location and IP address, helping it navigate the web more safely.

  1. Avoid Using Provider-Hosted Wallets

It is a wallet hosted by a third-party service provider that stores your private key on their servers. Even though keeping your private key seems to be easy, but it is highly insecure. You lose control of your private key when you use hosted wallets.

Provider-hosted wallets are risky because they store your private keys on the provider's server. In addition to these risks, keeping your private key on these servers also exposes them to cyber-attacks, an entity taking over the company, or even a financial failure. Cold storage is the best way to avoid all these problems.

  1. Be Sure to Only Deal With Reputable Crypto Entities

Trust is built on integrity, so before working with any crypto entity, ensure its reputation is the best it can be. But how can you tell a trustworthy crypto entity from one that is not? By doing extensive background research. It is also a fact that when you want to trust a crypto organization, you assume a certain amount of risk. However, you can reduce this risk through research, which is just as crucial for password managers as for crypto entities.

  1. Maintain Regular Checks for Intrusions

Ensure there are no intrusions on your gadget, either your PC or phone. You can easily recognize the default programs on your PC when installing a new operating system. It's easy to determine which default programs your PC will run when installing a new operating system because they'll automatically appear in the task manager. In this way, you can quickly tell if your PC is being attacked.

Hackers break in silently and wait for you to engage your crypto accounts so they can steal your passwords, private keys, and other vital data. So make sure to maintain regular checks for intrusions and keep your system secure.

  1. Stay Up-To-Date

Do not forget to keep everything up to date. For example, if you are using an online or software wallet, you must keep it updated. That way, you can ensure you have the latest security patches and updates.

You should also update your offline wallets and your hardware wallets from time to time. If you do not update your wallet app or firmware to the latest version, you may be at risk for unknown security vulnerabilities. In addition, if hackers hack the previous version of the app or firmware and you haven't updated to the latest version, your funds could be compromised.

Also, keep your gadgets and other software updated along with updating your crypto wallets. 

  1. Use Hardware Wallet

As opposed to software crypto wallets, hardware wallets are more secure. Hardware wallets don't suffer from security holes, cyberattacks, or other issues but rather stay off the grid and are invisible to hackers.

The hardware wallet stores your secret keys or crypto assets on a physical device with specialized firmware. It prevents unauthorized access to your private keys.

Hardware wallets are also protected against unauthorized use. Since it is protected with a PIN, you can regain access to your crypto assets with your backup code even if your hardware wallet is stolen or lost.

The hardware wallets are not completely free. You have to buy them. Just be sure to buy them only from reputable sellers to avoid purchasing hacked hardware wallets.

  1. When in Doubt, Get in Touch!

If you have any doubts about a crypto app, site, email, or even an ad, reach out to a professional or knowledgeable source.

It is a good idea for investors and traders to create a network of knowledgeable and experienced friends about crypto. Also, you may save yourself from falling for a crypto scam if you have someone who can guide you. For that, you can join a community of people with similar interests. By reaching out, you are taking a significant step away from falling victim to a crypto scam, a scam that may have cost you your entire cryptocurrency.

FAQs

Can My Crypto Be Stolen?

Yes, it can. Due to the anonymous nature of crypto transactions and the fact that they are irreversible, cryptocurrencies are a popular target for hackers. Crypto exchanges and crypto wallets are often hacked, making it difficult to attribute stolen crypto to a real-world identity and essentially impossible to reverse malicious transactions.

Can You Recover Hacked Crypto?

It is definitely unlikely you'll be able to retrieve your cryptocurrency if your wallet is hacked. You can always take immediate action if you feel any kind of suspicious activity with your wallet.

What to Do if Your Crypto Wallet Is Hacked?

Immediately set up a new wallet if you are sure your wallet has been hacked and transfer all your coins there if the attacker hasn't already taken them. In addition, you can also change your login details and enable two-factor authentication, which will prevent an attacker from accessing your account. Still, if the hacker has already wiped out your wallet, you should create a new one and delete the old one immediately. Because the wallet has already been compromised, you can't reuse it.

Should I Report Stolen Crypto?

Yes, you can report the cybercrime if you want an inspection, get your stolen funds back, you can contact the police. But you should always take a legal way and never get trapped by private parties who guarantee you to retrieve your stolen assets. Often, the entities that offer a fast recovery of stolen assets are scams. 

Bottom Line

Keeping your crypto wallet secure is your responsibility. No matter which security measure you take or how well you follow the safety measures, it is still possible to fall victim to various attacks and frauds. However, caution is the key to safeguarding your crypto wallets and assets. 

Hopefully, after going through our detailed guide on how to secure your crypto wallets, you have got an idea about the security and safety of your crypto wallets. You can make your crypto wallet secure by following these security measures. Always remember that once the cryptocurrencies have been stolen or lost, they are almost impossible to recover. So be cautious at all times!

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