Monday, May 20, 2024

Crypto security: Everything you need to know

Cryptocurrencies have become popular all around the world since the launch of Bitcoin. Although now there are plenty of other altcoins you can invest in, Bitcoin still represents the largest digital currency by market cap according to Binance. Digital currencies have become an investment that many people consider, but when navigating the crypto space, they should also take into account an important factor: security.

So, before stepping foot in the crypto market, you need to have knowledge about the best way to keep your investment secure and the factors that can affect the crypto security. Cryptocurrencies function on the blockchain, which is a safe platform that has started to be used by companies worldwide. The blockchain is a secure digital ledger that allows crypto transactions and keeps hackers away. However, even if the blockchain is way safer than other technologies, this doesn’t mean that it is immune to cyber-attacks and hackers.

When you invest in digital currencies, you must be extra cautious regarding security, as digital coins are decentralized, and no institution will help you in case problems occur. So, if you lose access to your crypto investments, they will probably be gone forever.

In this article, we will discover more information about digital currencies and crypto security.

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What is cryptocurrency?

Cryptocurrencies are virtual currencies that are secured by cryptography. Cryptocurrencies are based on blockchain technology that allows online secure payments at a fast transaction speed while reducing transaction costs. Additionally, cryptocurrencies work on decentralized networks that don’t rely on a central authority, like a bank or government.

Is crypto safe?

Blockchain is the technology that powers cryptocurrencies. This technology is quite a safe one, where all the transactions are time-stamped and recorded into blocks. Blockchain is also characterized by great complexity, which makes things quite challenging for hackers to get through, and this is why digital currencies are pretty secure. Furthermore, cryptocurrencies can become safer by taking extra measures, like opting for a two-stage authentication process.

Cryptocurrency Security Standards

The Cryptocurrency Security Standard (CCSS) represents an open standard that highlights the security requirements used in crypto exchanges, mobile apps, transactions and web applications. The purpose of the CCSS is to improve the overall security of digital coins by offering a checklist of the best practices that companies that deal with crypto transactions and wallets can adhere to.

Mostly, CCSS has ten points that companies should take into account to offer an improved experience to its users, including the following:

  • Seed phrase/Key generation
  • Key storage
  • Wallet creation
  • Key compromise policy
  • Key usage
  • Revoke Policy and Procedures/ Keyholder Grant
  • Data Sanitization Policy
  • Third-party audits
  • Proof of Reserve
  • Log Audits

The most common risks that can diminish the crypto security

You must always protect your digital currencies, which can be done with enhanced crypto security. Crypto services don’t offer the same level of safety as banks, and if the virtual coins are lost, they are gone forever. This is why certain precautions and risks must be implemented while investing in digital currencies to reduce the chances of losing them.

Here are some risks that can happen with your crypto investments.

  • Leaving your crypto investments on a single exchange can make them more prone to hackers.
  • Keeping the virtual coins in a hot wallet can have consequences as the data is connected to the internet, and because of this fact, it can be stolen and lost.
  • Email phishing has become very common, and hackers use it to gain access to crypto investments.
  • Crypto can also be lost by accident or due to natural disasters. For example, James Howell lost his hard drive that contained about 8,000 BTC, which now would be worth over $200 million. He lost the hard drive by accident when he was clearing out his house. The hard drive ended up in the landfills, and although James has tried to recover it, his attempts have been unsuccessful.

How can you protect your digital investments?

Digital currencies like Ethereum and Bitcoin are the main applications of blockchain technology, and they can be used to buy services and goods. If you don’t want to lose access to your crypto investment, it is essential to protect your assets and keep them secure. Here is how you can do this.

Do your research

The first step to take into consideration when investing your money and time in the crypto market is doing your research. First, you should research how the crypto works, what are the best options to invest in and how to keep your investment safe. Furthermore, you should also search for information about the exchange from where you are going to buy digital coins.  

Store your digital currencies safe

After you have done your research, it is imperative to store digital coins securely, which can be done with the help of a crypto wallet. Each digital wallet has its own security standards, features, and advantages. Therefore, before you choose one, it is imperative to take into account all these factors to ensure you make the best decision.

A hybrid strategy proved to be a wise method

On the market, you can opt for hot wallets that are online and have become very popular among investors. However, hot wallets are also preferred by hackers. So, individuals should only consider putting a small amount of their investment in hot wallets and the rest in cold ones.

Use a strong password

When it comes to passwords, you should keep them different and solid. You should never repeat the same password to other accounts. Because crypto is prone to hacker attacks and cyber threats, the accounts with low security can be victims and people can lose their investments. So, it would be better to change the passwords after a few months and have a two-factor authentication.

Always keep the key secret

When receiving and sending digital tokens, people use a secret key, and the owner must enter it before processing transactions. This secret key must not be disclosed to anyone and remain hidden. The key is very important, so it should always be stored somewhere safe.

Because the attempts to steal digital currencies have increased, you must always be careful when navigating this space.

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