The crypto ecosystem is an exciting market. With over 200 million users worldwide, crypto currencies have become the new Wild West, where everyone is looking to maximize profits, but few understand the security behind Blockchain technology. The rapid growth of this asset class attracts many uneducated investors that blindly invest based on headlines, hype, and FOMO, even if projects have vulnerable smart contracts, flawed codes or lack credibility. For the long-term growth of crypto currencies, it is imperative to understand security and make investors aware of the many risks associated with crypto, so they can prevent and act upon malicious attacks.
Here are 6 actionable steps you can take today to make your crypto investing more secure.
1) Buy a Hardware Wallet
Great technology calls for great responsibility, and becoming your own bank requires specific security measures. You probably heard the saying “Not your keys, not your coins” which means that if you don’t have access to your private keys, your coins are not fully yours. Leaving your crypto in an exchange gives them full ownership over your coins, and they can decide when you are able to withdraw or move your money. It is also important to add that if an exchange is hacked, your funds can be compromised.
A great way to start your security journey is by buying a hardware wallet. A hardware wallet is a fully decentralized wallet that allows you to store your crypto outside of the internet, it gives you full ownership over your assets and adds an extra layer of security. Having a hardware wallet is helpful for long term holdings or any assets you do not intend to move often. However, it is important to write down your seed phrase in a safe and offline place because anyone with access to your seed phrase will be able to access your funds. The best way to protect your passwords is to write them off the internet and never save them on your phone or electronic devices.
2) Use a Password Manager
Statistics say that 78% of people forget their password within 90 days, so if you are not logging into your crypto exchange and wallet often, it is likely you will forget yours as well. Earlier this year, a famous programmer locked himself out of his wallet worth $220 million dollars because he lost the password that granted him access to his seed phrase. He reminded the crypto community to learn from his lesson and take proper precautions when storing crypto currencies.
Our current digital economy forces us to use passwords daily, from the moment you check your work email in the morning to logging into your social media accounts. Passwords are extremely important, but there is not enough awareness of the risks associated with leaked passwords. Think about how much you have stored in your phone? Most people have their whole life there! From pictures of your loved ones to IDs and credit cards. A hack can cost you your whole identity. Now ask yourself, do you ever repeat passwords? Do you modify certain aspects of your password instead of creating a new one? Do you find yourself resetting passwords often because you forgot them? Do you use 123456 in passwords and feel clever about it? If you answered yes to any of these questions, you need a password manager immediately. The average person holds at least 100 passwords, 25% more than last year, and the growth of technology is just going to increase password usage even more. Although you are not expected to memorize 100 different passwords, it is expected that as a smart crypto investor you buy a password manager, which randomizes passwords, and only allows you to access your exchange or wallet when you connect it to your computer. Having a password manager will make your crypto journey safer, easier, but most importantly, it will bring you peace of mind.
3) 2FA on everything (hardware 2FA is recommended)
2FA stands for two factor authentication, which means that when you log in to your exchange or crypto app, an email or text message gets sent to your phone to verify you are the one logging in. You might notice that many banks have this feature in place, and it is for a reason. Having 2FA installed in your apps will help you keep track of your activity and notify you immediately of suspicious activity. It is important to highlight that 2FA is not a perfect system, and does have loopholes, such as a SIM swap where the attacker moves all information from one cellphone into another, including passwords, apps and photos stored in your cloud. Adding “time-based one-time password” where the password changes every 30 seconds allows you to add extra security to 2FA.
4) Invest in a VPN
Many crypto investors use VPNs to buy crypto assets not available in their region, but having VPN is vital for anyone navigating crypto security. A VPN is software that encrypts online data when you are using the internet, it also allows you to hide your IP address, making it harder for websites and attackers to track any online activities.
The early premise of crypto currencies was that you could do anonymous transactions and leave no trace, however this is not the case. Crypto currencies allow you to use “pseudonymous,” but it is not fully anonymous. Many exchanges and crypto apps demand KYC and AML procedures for security and legal reasons. This means your information could be accessed if an exchange or app is compromised. Using a VPN adds extra security by encrypting your data and not exposing your real-time location and internet history. When you buy a VPN, make sure you have “No Logs” and “Kill switch” capabilities. No logs mean your VPN will not track your downloads or activity in the web, and a kill switch means your internet will disconnect as soon as your VPN loses connection to avoid any compromised privacy. When buying a VPN, keep in mind that you might be able to obtain a free VPN, but those might not be fully secure as they have revenue models where your information is sold for profit.
5) Limit smart contract approvals
When using DeFi protocols, you might be familiar with signing smart contracts through Meta Mask to access specific platforms. It is important to understand that by signing insecure smart contracts, you compromise your account and funds. A vulnerable DeFi protocol connected to your wallet can drain token balances or introduce bugs to your wallet. One way to mitigate this risk is by keeping track of smart contract approvals and limiting token approvals. You can do this by customizing the spending limit in your wallet, so in case you sign a malicious contract, it will not drain your whole account. Limiting smart contract approvals to platforms you fully trust is the best way to go when navigating the prematurity of DeFi.
6) Always do your own research!
Whether you have a lot of technical knowledge, or you are still new to crypto investing, doing your own research and finding security tools to assist you in your journey is necessary. There are many blogs online teaching about the dangers of crypto, why security is important, and how to stay protected. At Valid Network, we have an active blog of technical and non-technical information, where we make it easy to understand crypto security.
The rapid growth of crypto attacks reveals the importance of understanding the different types of vulnerabilities, and which crypto assets might be insecure. Our new platform, Valid Data, monitors crypto currencies and provides investors with real-time insights, as well as predictive ones, on the security and credibility of such assets. We can identify on-chain threats such as re-entrancy, frontrunning, integer overflow and whale alerts before vulnerable smart contracts can be exploited. This gives a unique advantage to investors looking to buy or sell upon a potential crisis, even before crashes are reported in the media. Whether you are an individual trader looking to maximize your gains, or a hedge fund trying to preserve and minimize risks, Valid Data allows you to learn about crypto security and acquire financial advantage.
The crypto ecosystem is an exciting market. With over 200 million users worldwide, crypto currencies have become the new Wild West, where everyone is looking to maximize profits, but few understand the security behind Blockchain technology.
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