How to Keep Your Crypto From Being Hacked

Gemma says…

The best way to avoid being hacked is to store you cryptocurrencies in a wallet that isn’t connected to the Internet.

As cryptocurrencies become increasingly popular, so do hacking attempts. Since cryptocurrencies are a natively digital currency, they have no physical presence in the real world. Thieves do not need to come into your home to steal your coins. Instead, they can do so remotely via the Internet. To prevent yourself from falling victim, here are a few basic principles below that are important to keep in mind.

1. Don’t hold your crypto on exchanges

One of the most important security measures you can take is to never store your crypto assets on an exchange’s default wallet. Since exchanges store huge amounts of funds for their users, they are often the target of hacking attempts. In fact, there have been many successful attempts you may have heard of. Mt. Gox was an exchange that was hacked on two separate occasions, resulting in over 1 million bitcoins stolen and the exchange shutting down in 2014. In 2017, there was also an attempted hack of one of the largest exchanges in operation, Binance.

2. Hold funds in a hardware wallet

For the reasons highlighted above, it is best to move funds from exchange wallets to a user-controlled one. With wallets, there are two primary categories: online (software) and offline (hardware). Software wallets are more popular than hardware wallets because they are free and easy to use, but are not more secure. The safest option is to store cryptocurrencies in hardware wallets, which are like USB sticks that have security required to access the funds.

3. Keep private keys safe

The storage of private keys is also important when keeping cryptocurrencies safe. Private keys and public keys are generated during one’s first crypto transaction and in the creation of a wallet. Where public keys represent the address one sends funds to, private keys represent the key that allows you to access those funds. With any cryptocurrency, private keys are generated from the public key using cryptography, and the owner of the funds is the only one who should know it. It is recommended that when storing private keys, they should be written down and kept somewhere safe. By keeping keys on your computer, it becomes possible for a malicious actor to retrieve by hacking into your system. It is even recommended to not print this information, as printers can be hacked as well.

4. Enable two-factor authentication

Make sure you use two-factor authentication and multi-signature security. These measures help protect your cryptocurrency holdings in the event that one of your devices – such as a phone or laptop – is lost or stolen.

5. Secure your phone

Finally, the most extreme case of hacking involves hackers porting your phone number to a device they control, and authenticating your identity through your phone number. If they’re successful, they can gain access to your email, social media profiles, and applications like Evernote. To prevent hackers from being able to do this, make sure you set a password with your cellular carrier so only you can verify phone number ports. Choose an authenticator app over your phone’s text messaging. Never have your phone number tied directly to your Google or other accounts. Hackers are known to use this as a point of susceptibility to “recover” access to your accounts with that number.

This is not an exhaustive list of security measures! Do your own additional research when investing in crypto to protect yourself. You may also want to check out our podcast on crypto security best practices.