How to protect your cryptocurrency

14 Apr 2023 Author: Sofia Mashchenko

What are the 4 key cryptocurrency security measures, and should they be followed?

Cryptocurrency has been attracting more and more attention in recent years. A wide range of investors is ready to invest heavily in this asset. The hype around the emerging cryptocurrency ecosystem is causing more and more concerns about its security. The growing popularity encourages attackers to come up with new ways of attacking.

It is important to know how to protect your cryptocurrency so that it does not fall into the hands of scammers. It is difficult to say which cryptocurrency is the most secure, but a number of measures will help increase the protection for any of them.

Overview of Cryptocurrency Security Measures

The crypto ecosystem is decentralized, so there is no single organization that deals with security. It depends on the actions of the users themselves whether the cryptocurrency is secure to store and use. That is why we urge crypto-asset owners to follow security rules, monitor their accounts and use all possible means of protection.

Basic security measures include:

  • two-factor authentication;
  • multi-signature wallets;
  • cold storage;
  • cybersecurity hygiene.

The answer to the question of how secure a cryptocurrency is depends on the use of these measures.

4 Key Cryptocurrency Security Measures

Cryptocurrency-Security-Measures

These 4 measures will increase the level of security when storing cryptocurrencies and doing transactions with them.

  1. Two-factor authentication

Two-factor authentication (2FA) is a basic but effective security measure. 2FA is an additional layer of security used to ensure users have access to their accounts and wallets.

Two-factor authentication involves the use of a password or PIN, as well as a second level of verification. It can be implemented in several ways:

  • code generation in an application like Google Authenticator installed on a smartphone;
  • one-time password in SMS;
  • hardware tokens.

As a rule, a smartphone is used for the second level of verification. Unauthorized access to the smartphone is complicated by means of security features like fingerprint scanner, Face ID, and PIN code.

To keep the security level high, we do not recommend installing 2FA software on your computer. An attacker or hacker who has gained access to the device can easily use the verification code.

  1. Multi-signature wallets

A multi-signature wallet is a special wallet that requires multiple signatures from owners in order to work. This is a solution for organisations that need to reduce the likelihood of user abuse regardless of how secure the cryptocurrency is in these wallets. Each user receives unique keys, which are necessary to conduct transactions.

When creating a multi-signature wallet, the owner can set the number of signatures and set the “weight” for each of them. For example, the CEO’s signature may carry more weight than the signatures of his deputies or other employees.

To enter the wallet and conduct transactions, you can set the required number of signatures. For example, there are 5 signatures in the wallet. To perform operations, you can set the values:

  • 3 out of 5;
  • 4 out of 5;
  • 5 out of 5.

Multi-signature wallets have a high level of security. Even if one of the signatures falls into the wrong hands, they won’t be able to do anything without the other keys.

  1. Cold storage

Cold storage is the most secure way to store cryptocurrencies long-term. The solution is a hardware wallet, that is, a physical medium. A hardware wallet connects to a computer in the same way as a USB drive.

Most of the time, it is offline and not connected to the internet. Due to this, the level of security is increased, since attackers will not be able to connect to the wallet and crack the protection.

The main advantage of cold storage is that at the time of entering the private key, it is not yet connected to the Internet. This ensures that hackers cannot intercept the key.

  1. Cybersecurity hygiene

Attackers use different methods to take possession of other people’s assets.

  • Phishing sites disguise themselves as crypto exchanges to steal your username and password. Do not click on suspicious links, check the authenticity of the URL so as not to get to such resources.
  • Ransomware malware can block the device from starting up or accessing files. They demand a ransom in cryptocurrency, promising to lift the lock. The best protection is backing up your data with mandatory recovery verification (ransomware can encrypt backups too). You should also use other information security methods, such as: never using software from dubious sources (especially pirated) outside virtual machines; regularly updating the operating system, drivers, BIOS and router’s firmware, browsers and other software; using two-factor authentication; using unique (not reusable) complex passwords (store in the manager passwords); using an antivirus when working in Windows OS.
  • Illegal mining. Attackers install malware on your computer, which then uses your device for mining. Sometimes malicious code is injected into a web page and when you go to it, your device is being used for mining. For protection, it is recommended to install a reliable antivirus and ad blocker in the browser. You can also monitor the CPU load to recognize illegal mining.
  • Spam mailings can be used to obtain your data. The email may ask you to complete a survey, change your password or security question. The solution is not to follow the links in the email, delete it. For additional protection, you can set up filters for incoming emails. If you still receive a suspicious email, mark it as spam.

Should I Follow the 4 Key Cryptocurrency Security Measures?

Cryptocurrency-Hack

When investing in cryptocurrency, remember the rules for its storage. Apply all of the above methods of protection in practice. The security of crypto assets will depend on your actions.

Security Benefits

By following security measures, you keep your cryptocurrency assets. A secure hardware wallet with two-factor authentication is a suitable solution for long-term storage. It will be extremely difficult for hackers to get your data and take possession of the funds.

Together with a high level of protection, you will get peace of mind, because you no longer have to think about whether the cryptocurrency is secure.

Risks of non-compliance with security measures

The main risk is related to the possibility that attackers will gain access to your wallet and steal its contents. Even experienced investors or traders can lose all their funds when using unreliable wallets.

How to protect your cryptocurrency? We recommend using 4 key protection measures:

  • set up two-factor authentication when entering a wallet or exchange;
  • use a multi-signature wallet, in which signatures of several owners are required for entry and transactions;
  • use a hardware wallet – cold storage that is not connected to the Internet;
  • recognize social engineering and follow basic cybersecurity hygiene.

To protect yourself when storing and using crypto funds, it is better to trust simple but effective methods. H-X Technologies will help implement security systems and test them.

If your business processes involve cryptocurrencies, please contact us for a free consultation on cryptocurrency security measures.

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