Mt. Gox was among the pioneer crypto exchanges, and its market portion for BTC trades was around 70% in 2014. That’s when the platform noticed a disbalance in user accounts. It turns out that hackers stole 650,000 BTC over three years without being discovered.
DAO, a project that collected $150 million via crowdfunding, was projected to have a huge success on the Ethereum blockchain. A cyberattack led to a loss of $60 million only months after the platform launch, but the ETH network successfully recovered.
Another big crypto hack happened to the Japanese crypto exchange Coincheck. Hackers stole around $532 million in XRP and NEM tokens in 2018.
The above are only a few examples of the largest crypto hacks. The cyberattack threat is serious, so whether you buy Litecoin or any other currency, protecting your digital assets is a top priority. Our experts share the best tips to protect your digital wealth below.
Choose the Right Crypto Wallet Type According to Your Trading Activities
We can divide crypto wallets into two basic types:
- Custodial. Online crypto exchanges offer custodial wallets. They hold the private keys, so you essentially keep your assets in the exchange. These wallets are a good start for beginners, and they bring added flexibility. The downside is that a hacker attack on the exchange could compromise your funds.
- Non-custodial wallets. You are the only one with access to this wallet (provided you don’t share your info with anyone). The data you receive for the wallet, including the private keys and the seed phrase, is for your eyes only. The advantage is excellent security, but the downside is that losing your keys also means losing access to funds.
Another division is into hot and cold crypto wallets. Some examples of hot wallets include MetaMask and Coinbase. These are software solutions installed on your computer or mobile device. You can conveniently and easily access your funds at any given time.
Cold wallets offer to store your private keys offline. It’s the maximum security possible because not being connected to the internet keeps your assets safe from hackers. The most popular are Trezor Safe 3 and Nano S Plus.
So, what are the best crypto wallets for you? The answer is that this depends on your needs. For small sums, beginners, and fast traders, quick access to hot custodial wallets is the best option. But if you plan to store your crypto in the long run, cold offline storage is your best bet.
Keep Your Software and Firmware Up to Date
Developers release software and firmware updates to enhance stability and security. Updates aim to address vulnerabilities, so it’s important to install them as soon as they become available. Otherwise, you might be running a security risk that could make your digital assets more prone to theft.
Ledger is famous for its reputation as a secure digital wallet. However, even that company experienced a security breach in 2023. A cyberattack targeted a former staff member’s NPMJS account. A successful phishing attack led to the upload of a malicious Ledger Connect Kit, which led to the wallets connecting to platforms and apps like SushiSwap and Zapper. Ledger responded quickly, with the file only being available for five hours.
Updates don’t refer only to new crypto wallet versions. We are talking about updates of other apps and software installed on your device, including the operating systems.
Utilize VPN for Safe and Secure Transactions
While accessing your crypto assets or handling trades, it’s essential to use only a secure internet connection. The rule generally refers to staying true to your home network.
You should avoid accessing wallets via shared and public Wi-Fi connections. They make you much more vulnerable to hackers. Additionally, there’s the risk of not deleting browser history or logging out from a platform, which means an unwanted party could gain access to your data.
Using a VPN can be the security layer you need to perform safe transactions. While you browse the internet, a VPN routes your traffic through its server to encrypt data and mask your IP address. However, please note that premium VPN services are far safer and better than free ones.
Learn More About Advanced Mechanisms in Digital Wallets
Digital wallets and platforms often use advanced mechanisms, such as a digital dead man’s switch. Services like Sarcophagus use this security mechanism.
The basic idea is simple — you set how long your account should be inactive for the switch to activate. If you don’t have any activity during that time, the switch makes assets available by following the instructions you provided. This could serve as an advanced backup system.
Diversify Your Crypto Holdings Across Multiple Wallets
Experts don’t recommend holding all your digital assets in a single wallet. It’s a logical consideration since a potential cyberattack would compromise all your funds. But if you diversify the holdings, even if an attack occurs, it will only influence one of your wallets.
You can prioritize the assets the way you see fit. For example, keeping some BTC in a cold wallet can be a wise approach, especially if you don’t plan on trading the coin soon. If you have assets that you plan to sell soon or use as a part of the day-trading strategy, consider using a wallet at the desired online crypto exchange.
Conclusion
Online transactions are becoming more popular, and the internet has never been this accessible. It’s only natural that all of this also increases online crime, so cyberattacks are a potential threat you need to take seriously.
Preserving your digital wealth begins by keeping sensitive data only available to yourself and stored in secure places. Using safe crypto wallets and secure internet connections is imperative. Also, you should only stick to personal devices with updated software and firmware. A small effort can go a long way because these will ensure your assets hold the smallest risk possible of getting compromised.
