Top Security Practices to Keep Your Crypto Safe

The promise of financial freedom comes with a heightened responsibility: securing your assets. Unlike traditional banking, where security measures are handled behind the scenes, crypto requires users to actively safeguard their funds from an array of digital threats.

As the saying goes, "Not your keys, not your coins," underscoring that control and consequently, security rests with you. It not only calls for more than just tech-savviness; but requires an informed, vigilant approach.

In this guide, we'll cover essential security practices, tailored to protect your assets from potential risks and help you stay one step ahead in a dynamic digital world.

Use a Secure Wallet: Cold vs Hot Storage

One of the first decisions in securing crypto is choosing a reliable wallet. There are two main types: hot wallets, which are connected to the internet, and cold wallets, which remain offline.

• Hot Wallets are convenient for frequent transactions but come with increased vulnerability due to their online connection. Examples include software wallets like MetaMask and Trust Wallet. These wallets provide access flexibility but are more susceptible to phishing and cyberattacks.
• Cold Wallets or hardware wallets, such as Ledger and Trezor, store private keys offline. A study by Chainalysis found that cold wallets reduce the risk of online hacks, making them ideal for storing large amounts of crypto or long-term holdings. Cold wallets, while less convenient for daily use, offer unmatched security by keeping your assets disconnected from online threats.

Pro tip:

For maximum security, consider a combination of both: use hot wallets for smaller, more active holdings and cold wallets for larger amounts that you don’t intend to trade frequently.

Enable Two-Factor Authentication (2FA)

Two-Factor Authentication (2FA) adds an additional layer of protection to your accounts by requiring a secondary verification step. According to Google’s Security Blog, implementing 2FA can block up to 99.9% of automated attacks.

Most exchanges and wallet providers support two-factor authentication, and it’s recommended to use an authenticator app like Google Authenticator or Authy rather than SMS-based 2FA. SMS verification, while still helpful, is more vulnerable to SIM-swapping attacks, where attackers can port your phone number to their device.

2FA applications generate time-sensitive codes, meaning they refresh every 30 seconds. This time-sensitive nature makes it nearly impossible for hackers to gain entry unless they also have access to your device.

Keep Your Private Keys Offline

Your private key is essentially the password to your cryptocurrency. Storing it online—whether in a cloud service or your email—increases the risk of unauthorized access.

According to a report from Cointelegraph, storing private keys offline reduces vulnerability to hacking attempts. Write down your private key on paper and store it in a secure, fireproof location, or better yet, use a hardware wallet that securely stores the key offline. Never share your private keys, and be cautious of phishing attempts that may ask for them.

Be Cautious of Phishing Attacks

Phishing attacks remain one of the most common methods cybercriminals use to gain unauthorized access. These attacks trick you into providing personal information through fake websites, emails, or social media messages. Chainalysis reported that phishing scams led to over $7 billion in crypto scams in 2021 alone.

To prevent falling for phishing scams:

• Double-check URLs for accuracy. Scammers often use URLs that closely resemble legitimate sites.
• Never click on links from unverified sources, especially when it’s related to exchanges or wallets.
• Verify the authenticity of emails by contacting the exchange or wallet provider directly.

Enable anti-phishing settings available on many crypto platforms. For example, Binance and Coinbase allow users to add personalized anti-phishing codes to their emails, which can help distinguish legitimate communications from fraudulent ones.

Regularly Update Software

The software you use to manage your crypto holdings, such as wallets and exchange apps, must be kept up to date. Developers frequently release updates to address vulnerabilities, add features, and improve security. A study by Kaspersky found that 40% of cyber incidents stemmed from outdated software.

Whether you’re using a mobile wallet app, hardware wallet firmware, or browser extension, make sure you download updates from official sources. Disable automatic updates on hardware wallets to prevent accidental installation of compromised firmware, and always verify update authenticity by checking it against the official manufacturer's website.

Avoid Using Public Wi-Fi for Transactions

Public Wi-Fi is often unsecured, making it easier for hackers to intercept your internet traffic. According to a study by Symantec, 87% of people have used unsecured public Wi-Fi, exposing themselves to potential cyber threats.

When accessing your crypto accounts, use a secure, private network. If you must use public Wi-Fi, consider using a Virtual Private Network (VPN) to encrypt your connection. VPNs add an extra layer of protection by masking your IP address and encrypting your data, which can help prevent man-in-the-middle attacks where hackers try to intercept data between you and the network.

Implement Multi-Signature Wallets for Added Security

A multi-signature (multi-sig) wallet requires multiple private keys to authorize a transaction. This setup is especially useful for businesses or joint accounts, as it reduces the likelihood of unauthorized access even if one key is compromised.

For example, BitGo offers multi-sig wallets that are popular among institutional investors. A multi-sig wallet setup can require two or more keys out of a specified number (e.g., 2 of 3) to approve a transaction. This not only enhances security but also helps prevent unauthorized access by making it harder for hackers to control all required keys.

Use Trusted, Secure Exchanges

Choosing a reputable and secure exchange is essential when buying, selling, or storing crypto. Look for exchanges with strong security track records, transparent policies, and features like insurance for stored funds. Some of the most secure exchanges, such as UnicoinDCX, Coinbase and Kraken, maintain a significant portion of funds in cold storage, where assets remain offline and are thus less vulnerable to online attacks

In a report by CryptoCompare, exchanges that offer insurance funds for users, provide added security against losses due to theft. Verify that the exchange has robust security features, including mandatory KYC (Know Your Customer) verification and a history of protecting user funds in previous incidents.

Use Decentralized Exchanges for Added Privacy

While centralized exchanges offer robust security features, decentralized exchanges (DEXs) allow you to trade directly from your wallet, minimizing exposure to exchange-based security risks. Decentralized exchanges, like Uniswap and PancakeSwap, do not require you to deposit funds, reducing the risk of exchange hacks.

However, DEXs come with their own risks, such as susceptibility to front-running attacks. Conduct thorough research and use reputable platforms, as there is less recourse in the event of a breach compared to centralized exchanges.

Stay Vigilant Against New Threats

Crypto is an evolving field, and so are the threats. As reported by the U.S. Federal Trade Commission (FTC), crypto scams are continually evolving, with fraudsters using new tactics such as rug pulls, fake airdrops, and pump-and-dump schemes. Follow updates from credible sources like CoinDesk, Blockonomi, and major crypto exchanges’ security blogs.

Consider joining security-focused forums or channels, such as Reddit’s r/CryptoCurrency or Telegram groups run by security experts. Keeping up with the latest threats can help you spot red flags early and avoid potential pitfalls.

Conclusion

Securing your cryptocurrency is an ongoing process that requires vigilance, understanding, and action. By using a secure wallet, enabling two-factor authentication, staying informed about new security threats, and adhering to these best practices, you can significantly reduce your risk exposure and enjoy a safer crypto experience.