Blog Investing Is your crypto wallet secure? How to protect your crypto

Is your crypto wallet secure? How to protect your crypto

date January 26, 2021 time 5 min read 127 views

For most cryptocurrency owners, your number-one concern is crypto wallet security from theft. Considering the prevalence of hacking and fraud in this sphere, that’s no surprise. But there are other factors you should watch for as well. Here are some common features you should look for to vet a platform for its security and minimize your risk.

An estimated $4.4 million worth of crypto was lost to scams or fraud in 2019. Crypto wallet security is increasingly important as new investors flood into the market looking for wallets that are secure enough to avoid hacking.

But making your crypto hack proof isn’t the only thing you need to worry about. On the other end, you might have also heard horror stories about Bitcoin owners losing access to valuable digital portfolios thanks to extensive safety protocols.

In early 2021 it was revealed one San Francisco-based coder was unable to access his 7,002 BTC in his personal wallet because he had forgotten the passcode he had written down for his wallet.

To lower the chance of you falling prey to either event, let’s examine the best types of crypto wallets available and the most useful security features you need to know about today.

Crypto wallet security should be a top priority for any cryptocurrency owner
Crypto wallet security should be a top priority for any cryptocurrency owner
(source: ctfassets.net)

Crypto wallet types

To improve your crypto wallet security, you need to understand the different types of crypto wallets available.

Crypto wallets are broadly divided into hot wallets and cold wallets as well as hardware and software wallets.  

Hot wallets store your crypto entirely online, making it possible to access them from anywhere. Software wallets and online wallets are always hot wallets. A hardware wallet can technically be a hot wallet if it maintains an internet connection.

Hot wallets are the most attractive to beginners thanks to their ease of use and utility. But they’re also much more vulnerable to hacking.

Coldwallets store your assets in a physical location, like a piece of hardware. They usually take the form of flashdrive-like devices that plug into a computer or other device for access.

How to keep your crypto wallet safe

Just because you use a cold wallet, it doesn’t guarantee that you’ll be safe from online threats. Security features vary from wallet-to-wallet. Let’s address some of the main safety concerns for crypto wallets.

Can crypto wallets be hacked?

Sadly, the biggest threats to the safety of cryptocurrency are frauds and hacks. Fortunately, technology on the wallet front has really kept up with the times. Most wallets today are fully-encrypted and difficult to access without an extensive personal key.

However, even though many wallets today are essentially hack-proof, there are always ways around even the most protected wallets through other exploits.

For instance, in 2020 hackers gained access to the major crypto wallet, Ledger. This led to the names and phone numbers of 272,000 customers being published online. The hackers also threatened to rob users’ private keys from their home addresses if they did not send them crypto.

Ledger is still working with law enforcement officials to prosecute the individuals involved, and has taken down almost 200 phishing websites. It has also advised its users to ignore ransom threats.

Trusting any online third part with personal information can be a risky decision that can affect your crypto.

Crypto wallets can be hacked, but you can take measures to lower the chance of it happening
Crypto wallets can be hacked, but you can take measures to lower the chance of it happening (source: hackers-list.com)

Security features to look for in crypto wallets

Here are some common features that the best crypto wallets online (and other crypto storage options) use:

  • KYC requirements — a way of verifying customers’ personal information to avoid criminals that complies with anti-money laundering regulations.
  • Real-time login notifications — ensures you find out immediately if someone else accesses your account.
  • Two-factor authentication (2FA) — stops anyone from logging into your account without also hacking your second authentication method.
  • Hardware backup — lets you make back up your private key and verification information on an external device so you can always access it.
  • Multi-signature authentication — requires users to have at least two private keys to sign in or make a transaction.
  • Transaction confirmation — means nobody can withdraw money from your account without confirming it (usually through text or email).
  • Whitelisting security features and withdrawal addresses limits the devices that are able to access your account or withdraw crypto.
  • Account recovery — offers ways to access and recover your account in the event of a hacking, such as a backup password or 2FA verification key.

Most platforms probably won’t have every single feature listed above — but they should at least have a few.

How can I know a crypto wallet is safe?

It’s impossible to keep any asset 100% safe. Even if you store dollar bills under your mattress, there’s always the chance of a thief (or family member) getting their hands on them.

And as crypto is essentially just pieces of data online, it makes it that much more difficult. If you buy a physical wallet to protect from outside hacks, you may be in trouble if you forget your key. However, if you store your crypto on an exchange it may be hacked.

One easy way to know if a crypto wallet is safe is to look up reviews online and see what other people have experienced. We even have a list of some of the safest crypto wallets used today.

Extra crypto wallet security precaution to take

A few additional measures that anyone can take are:

  • Storing your key and password somewhere safe offline — it’s almost impossible for hackers to access a physical object stored in your home.
  • Using a VPN when accessing your wallet makes it harder for hackers to access your device.
  • Spreading your crypto holdings across multiple places — if one wallet is compromised, your other assets will be safe.
  • Choosing a secure password improves your security and reduces your chances of being hacked.
Using a VPN is one way to increase your crypto wallet security
Using a VPN is one way to increase your crypto wallet security (source: pixabay.com)

Store your crypto with MyConstant, where your security is our priority

Life is stressful enough already without having to worry about the security of your investments — that’s why, at MyConstant we go above and beyond to keep your money (and crypto) safe.

Our platform uses most of the security features mentioned above for your funds, including KYC requirements, two-factor authentication, and complex password requirements as well as a mixture of hot and cold wallet storage.

And we take it a step further. We don’t even hold your assets ourselves. We store your money with our secure partner platform, PrimeTrust, regulated and insured in the US. There’s no way we could suddenly disappear with any of your funds.

We also use other, more sophisticated security protocols to keep your personal information hack-proof and provide 24-hour on-call customer service to walk you through everything.

And the best part of all? You can earn up to 11% interest on your idle BTC, BNB, and ETH you hold on MyConstant

Want to find out more and start earning? Create your free account now.

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