New to Crypto? Stay Safe and Avoid These Common Scams

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New to Crypto? Stay Safe and Avoid These Common Scams

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The surge in prices and popularity in Bitcoin and Ethereum only means that virtual currencies often become a target for hackers that want to take advantage of these valuable assets.

Even the economics of hacking suggests that cybercriminals will continue to drift towards digital currencies as they rise in value and become more prevalent in our daily lives. Not only that but tracking the work of hackers is often problematic since their footprints can be eliminated digitally. When a crypto account is attacked, investors do not have any support legally since the virtual coins are still unchecked by a central bank or a government entity. 

Moreover, it makes sense to wonder why you should bother securing your cryptocurrencies when some investors claim that Bitcoin is meant to be the world's safest financial solution. While Bitcoin and other cryptocurrencies themselves might be safe, the shaky link in the equation is something you may not expect: you are the weak link.  

To put it in simple terms, you're your own bank, and as such, you're entirely accountable for safeguarding your crypto assets. So, if you're a novice to crypto and still anxious about its safety, here are a few steps you can follow to protect your cryptocurrency investment.

Use Strong Passwords 

One simple way to safeguard your investments is by using strong passwords to protect your wallet and crypto-related accounts. Typically, cybercriminals use different devices to render stolen passwords, so the more difficult and longer your password is, the harder it is to crack.  

It's also essential to keep following the password best habits in mind:  

  • A steady password will contain a long, complicated string of characters, so it's harder to crack. For instance, a secured password must contain at least 12 characters, with a generous string of numbers, symbols (most common ones are %$! #&), lowercase and uppercase letters.  
  • Avoid using repetitive passwords for different accounts across multiple platforms. This will make you susceptible to a brute-force attack, especially if the password has been revealed in a previous data breach. 
  • Make sure you log out of your account whenever you're done with a transaction. In doing so, you will avoid hackers trying to hack your account (particularly on public WIFI networks) by stealing your session cookies. 
  • You can also use a password manager, so you won't have to type it out every time or forget it. 

Consider Two-Factor Authentication (2FA) 

Two-step verification is usually added to a variety of digital processes as an extra layer of security. Basically, with two-step authentication, you can only access an app or a website after you've passed multiple security checks. 

Therefore, aside from your typical password, the website may ask you to input a secret code sent to you either through SMS, email or push notification. These verification features usually expire after some time, making it difficult for a hacker to use past codes to access your account. 

Every cryptocurrency exchange supports two-factor authentication to better secure your account. Some offer simple SMS and email verification while others take it a step further with 2FA websites and apps like Google Authenticator. 

Secure Your Crypto Wallet 

The safety of your investments also depends on the type of wallet you use. Usually, you can choose between a non-custodial and custodial wallet for storing your coins.  

A custodial wallet is a digital wallet operated by third parties (typically MT5 cryptocurrency brokers and exchanges) who help secure your crypto holdings and hold your private keys. Even digital wallets are a user-friendly option to store your assets, that's still a bad idea for storing your crypto long term. And here is why: 

  • Custodial digital wallets are centralized, which makes them not very much different from banks since they have control over your assets. 
  • You won't have access to your private key, which you will always need the wallet provider to grant access to your own money. 
  • Your wallet could get breached, leaving you with the possibility of losing your cryptocurrencies. 

On the other hand, a non-custodial wallet is decentralized since you're the sole custodian of your private keys. They will allow you full control of your cryptocurrencies and nobody can access your money without your permission. 

Always Use Cold Storage 

Cold storages are basically electronic devices meant to specifically secure your crypto offline. 

With a cold storage device, you can only process a transaction when it's linked to your smartphone or computer. Cold wallets are way more costly than hot wallets, however, if you can afford it, you will sleep like a baby knowing your funds are safe. 

Multi-signature wallets 

Multisig wallets are likely the intersection of non-custodial and custodial wallets. Each copy payer requires a private key for accessing the wallet but needs other copypayers keys to approve transactions from the wallet. 

Basically, Multisig wallets need two or more private keys to be provided at the same time before any money can be accessed or uploaded. Without the necessary number of keys, no one can perform transactions using the wallet. 

Lose your Keys, Lose Your Crypto 

Private keys are imperative when it comes to your cryptocurrency's safety. A private key contains a string of numbers that represents the cryptocurrency in your wallet. 

Your private keys will primarily prove ownership of cryptocurrency assets on a specific blockchain address and allow you access to your funds. 

Not to mention that, if it falls into the wrong hands, bad actors can have full access to your funds. As for your wallet security, the rule of thumb is, you don't own your fund if your private isn't in your possession. 

Since the value of private keys is obvious, it is important that you backup your private keys. But if you didn't back up your private keys and lose your wallet, you can quickly retrieve it by using a mnemonic phrase. A mnemonic phrase can be a user-friendly option for restoring your wallet, but you might still have to write it right. 

Featured image from Unsplash.com
Updated 01:34 AM UTC+8, 18 Feb 2021
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Crypto Staff
Crypto Staff
Contributor
 
Only Published crypto-related and blockchain-related articles, sponsored or non-sponsored articles on KenKarlo
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