In recent times, cryptocurrency has become incredibly popular as a substitute for conventional financial institutions. However, a special set of security concerns associated with cryptocurrency do not exist with conventional banking. Twenty-two was a dismal year for bitcoin speculators. A record $4 billion in bitcoin was stolen by hackers last year, claims Chainalysis, a blockchain research company. According to Chainalysis, there will be $3.8 billion in cryptocurrency hacks in 2021, up 15% from $3.3 billion the year before and a big leap from the meager $0.5 billion taken in 2020. Since the general public has been exposed to cryptocurrencies more recently, hackers have found their online holdings to be bigger and more appealing targets. Anyone who possesses digital currency should therefore be aware of how to protect their possessions from malevolent parties. You will find more information in this book on safe cryptocurrency storage so you may maximize your returns without sacrificing security. Let us first familiarize yourself with cryptocurrency wallets, or the places where cryptocurrency is kept.
What is a Crypto wallet?
A crypto wallet is a software program to store your private and public keys, receive and send digital currencies, monitor balances, and interact with various blockchains. Having a cryptocurrency wallet is essential for managing and securing your crypto assets. There are two types of cryptocurrency wallets – hot or cold- depending on whether they are connected to the internet. Hot wallets can be accessed anytime, including all online cloud wallets, most software and mobile wallets, and exchanges. Although you can receive funds anytime with a cold wallet, no one can transfer them.
On theother hand, cold wallets are not connected to the internet and allow you to store your funds offline. Offline storage devices, hardware wallets, offline paper wallets, USBs, and physical bearer items like bitcoins are all cold wallets. Most cryptocurrency holders use both hot and cold wallets. Hot wallets are ideal for frequent trading, while cold wallets are better suited for the long-term holding of crypto assets.
How To Store Your Crypto Securely?
Here are some ways you can store your crypto assets securely:
1. Commercial Non-Custodial Cold Wallets
If you are not actively trading your cryptocurrency, it is recommended not to keep it on an exchange. Online crypto exchanges, both major and minor ones like FTX, are frequent targets for hacks and misconduct due to inconsistent regulation and security. It is essential to be cautious and prioritize security while dealing with exchanges. A basic password is all that stands between a hacker and your funds. To safeguard your cryptocurrency, it is best to store it in a physical "cold wallet" offline. These wallets (specifically hardware wallets) are physical devices that store your crypto offline. These can only connect to the blockchain through your private key. Hardware wallets like Ledger and Trezor, which resemble USB drives, can store multiple cryptocurrencies for under $150, offering enhanced security and greatly reducing your risk of being hacked. It is crucial to always enable two-factor authentication (2FA) on all wallets and exchanges that support it, and never disclose your private key to anyone.
2. Enable Two-Factor Authentication
2FA is an increasingly popular way to secure your accounts and identities. 2-Factor Authentication (or 2FA) is a form of Multi-Factor Authentication (MFA) that provides an extra layer of protection in verifying who you are online. It adds an extra security measure beyond just quote something you know & quote; (like a password) by also requiring & quote something you have & quote (like a dynamically-generated code from an authenticator app) or "something you are" (biometrics like retina scan or fingerprint). 2FA is the best defence against account breaches or crypto theft. Just remember to always adhere to the best 2FA practices suggested by providers. With 2FA, users can rest assured that their accounts and data remain safe and secure!
3. Store your seed phrase securely
Having full control over your cryptocurrency means having the ability to secure it in your way. The most significant aspect of securing your crypto funds is related to your crypto wallet's seed phrase, also known as a recovery phrase. The seed phrase is a 12, 18, or 24-word phrase that is central to the generation of private keys for all cryptocurrencies you hold. It is similar to the master key that hotel managers possess. This means that your seed phrase is the only backup to your private keys, which gives you access to your crypto assets. If you lose your hardware wallet or forget your PIN, you can restore access to your private keys and crypto assets by using your seed phrase. Thus, you can see how critical the seed phrase is. When copying the seed phrase, it is essential to ensure that you copy it word for word, exactly as displayed on the wallet. Any minor mistake, such as a wrong letter or word, can lead to the loss of your cryptocurrencies. It is critical to carefully store your seed phrase in a document or on paper to prevent losing it.
To ensure maximum security, it is advisable not to store your seed phrase on any device or application that is connected to the internet. Storing the seed phrase offline is the safest option, as it minimizes the risk of it being accessed by unauthorized persons.
4. Update your software
Keeping software up-to-date is one of the key ways to secure your cryptocurrencies. After all, hackers are always looking for weak points and software patches are designed to help protect against those vulnerabilities. As your software gets older and older, the likelihood that loopholes have been discovered increases. So its important to stay current on software updates by regularly checking for new possibilities in terms of applications and also operating system updates.
The ability to keep your cryptocurrency safe and secure is a crucial skill to learn on the journey to becoming your bank. The sooner you learn it, the better.
Top 10 Better Performing Cryptocurrencies in 2024
It seems you’ve listed ten cryptocurrencies. While I can’t confirm their performance in 2024, I can provide information on these cryptocurrencies up to my last update:
- Bitcoin (BTC): The pioneer cryptocurrency, often considered the digital gold and the benchmark for the entire crypto market.
- Ethereum (ETH): A blockchain platform enabling smart contracts and decentralized applications (DApps), with its native cryptocurrency being Ether.
- Solana (SOL): A high-performance blockchain platform known for its fast transaction speeds and low fees, supporting decentralized applications and crypto projects.
- Cardano (ADA): A blockchain platform known for its focus on sustainability, scalability, and interoperability, aiming to provide a more efficient infrastructure for decentralized applications and smart contracts.
- Binance Coin (BNB): The native cryptocurrency of the Binance exchange, used for various purposes including trading fee discounts, token sales, and more within the Binance ecosystem.
- XRP: A digital asset and payment protocol known for its fast and low-cost transactions, primarily used for cross-border payments and remittances.
- Dogecoin (DOGE): Initially started as a meme, Dogecoin has gained popularity as a cryptocurrency for tipping and small transactions due to its low value and active community.
- Tether (USDT): A stablecoin pegged to the value of the US dollar, often used as a hedge against cryptocurrency volatility and as a medium of exchange in crypto trading.
- USD Coin (USDC): Another stablecoin pegged to the value of the US dollar, providing stability and liquidity in the crypto market for traders and investors.
- TRON (TRX): TRON (TRX) is a blockchain-based decentralized platform that aims to build a global digital content entertainment ecosystem using blockchain technology and distributed storage. Founded by Justin Sun, TRON seeks to decentralize the web by enabling content creators to bypass middlemen like YouTube and Facebook and directly interact with their audience.
Common Cryptocurrency Security Issues
Indeed! An outline of typical problems with cryptocurrency security follows:
1. Phishing: Phishing is the practice of using phoney websites, emails, or texts to deceive someone into disclosing secret keys or login credentials. To take user money, attackers might pose as reputable bitcoin exchanges or platforms.
2. Ponzi Schemes: Rather than making real money, Ponzi schemes use money from new investors to pay returns to previous investors, therefore promising great returns to investors. Participants suffer large losses when these schemes eventually fail because there aren’t enough new investors to keep up rewards.
3. Fake Initial Coin Offerings (ICOs): Initial coin offerings (ICOs) that are fraudulent trick investors by selling tokens in projects that are either nonexistent or illegal. These scams earn money by taking advantage of the excitement around initial coin offerings, but they frequently take investors’ money before offering anything of substance.
4. Pump and Dump Schemes: To draw investors, plan organizers broadcast misleading or inaccurate information about a cryptocurrency, therefore inflating its price artificially. They sell their assets at a peak, which causes the price to fall and leaves other investors with losses.
5. Fake Wallets and Exchanges: Attackers create phony cryptocurrency wallets and exchanges that mimic legitimate ones in order to steal personal information or money from users. Should potential clients download risky software or provide these phoney platforms their secret keys, they face the threat of having their funds stolen or compromised.
6. Social Media Giveaway Scams: To advertise phoney giveaways or airdrops, con artists pose as well-known people or groups on social media. They invite people to donate bitcoin to a certain address in order to get a bigger sum back, but victims never get the promised benefits.
7. Constraints imposed by malware and ransomware: Malevolent software has the capability to pilfer personal keys or cryptocurrency purses from users’ devices. Ransomware attacks, which pose a risk to both individuals and organizations, encrypt the files of their targets and demand bitcoin in exchange for decryption keys.
8. Double-Spend Attacks:: Double-spending attacks transpire when a user exploits vulnerabilities within the network’s consensus mechanism to duplicate the expenditure of a single bitcoin. While blockchain technology aims to prevent double-spending, certain types of assaults—such as 51% attacks or race attacks—are capable of breaching these safeguards and resulting in monetary losses.
To mitigate these risks, cryptocurrency users should exercise caution, conduct thorough research before investing or transacting, use reputable platforms and wallets, enable security features like two-factor authentication (2FA), and stay informed about the latest security threats and best practices.
