A Chainalysis report states that the value of stolen and hacked cryptocurrencies decreased significantly in 2023 compared to the previous year’s data.
Illegal proceeds from cryptocurrency scams fell by 29.2% and illegal proceeds from hacks fell by 54.3%. This has been helped by a sharp decline in decentralized finance (DeFi) hacks, which may indicate that DeFi systems are improving their security practices.
However, cryptocurrency holders must remain vigilant and proactively protect their assets.
Here are some of the best ways you can protect your cryptocurrency wallet in 2024.
How to protect your cryptocurrency wallet: Experts define five key steps
Despite an overall decline in cryptocurrency-related criminal activity, the ever-evolving nature of scams and hacking techniques can still put individual users’ cryptocurrency wallets at risk.
Implementing strict security measures, staying up-to-date with the latest trends, and constantly monitoring your wallet for suspicious activity are some of the important steps digital asset owners should take to protect their cryptocurrencies.
1. Choose your cryptocurrency wallet wisely
Choosing the right cryptocurrency wallet is one of the most important steps in keeping your digital assets safe, says Jeff Owens, CEO and co-founder of Haven1, a layer-1 blockchain developed to address Web3’s security and liquidity issues. too loose, he told Techopedia. .
According to Owens, cold/hardware wallets are one of the most secure options users can choose because they allow you to store your private keys offline, just like Ledger. Additionally, these types of wallets come with PIN protection and recovery seed phrases, but they can be a bit difficult to use for beginners.
However, other experts point out that each type of wallet offers a different balance between convenience and security, so users can choose the wallet that best suits their security needs and features.
Experts added that users who own large amounts of cryptocurrency may consider cold storage wallets because they are not connected to the Internet and are not vulnerable to hacker attacks.
2. Pay special attention to passwords and private keys
Experts point out that setting a strong password is probably the first step in securing a user’s cryptocurrency wallet.
According to Haven1’s Owens, one of the biggest mistakes cryptocurrency holders make when securing their wallets is weak passwords and a lack of two-factor authentication (2FA).
Additionally, users should also pay special attention to where they store their private keys.
According to Alvin Kan, COO of Bitget Wallet, storing private keys offline for as long as possible via a hardware or paper wallet can prevent hackers from accessing them over the Internet.
3. Save your passwords offline
The more information a user stores online, the easier it is for hackers to access it. Therefore, returning to the old-fashioned days of paper and pen can ensure the safety of your digital assets in your cryptocurrency wallet.
Bitget Wallet’s Kan added that the backup process for hardware wallets often includes managing a recovery phase. For extra security measures, it is recommended to write your recovery phrase on paper and save it offline.
4. Update your software regularly
Not updating the firmware on your hardware wallet is another problem that can leave certain users vulnerable to hacker attacks.
Updates often include bug fixes and tighter security measures, making them an essential part of protecting your cryptocurrency wallet.
5. Be careful with every transaction
According to a Chainaosis report, fraud revenue dropped in 2023, but consent phishing scams increased in importance last year. In consent phishing, scammers trick users into signing malicious blockchain transactions that grant them access to the victim’s wallet.
The report highlighted that in 2023, fraudsters stole $374.6 million from cryptocurrency wallets through consent phishing.
In addition, Bitget Wallet’s Kan said that users should be especially careful with links and file downloads and always double-check website domains to avoid phishing sites masquerading as official websites.
The Future of Crypto Wallet Security
The integration of advanced encryption, biometric authentication and smart contracts are among the first steps in an emerging trend aimed at protecting digital assets stored in wallets.
Lian said that integrating biometric authentication into user authentication can provide users with a more secure and personalized way to access their wallets. At the same time, automating security protocols using smart contracts reduces the risk of human error and further improves security measures.
Kan explained that Bitget Wallet has already implemented several new security measures, such as dividing private keys into multiple parts and MPC and AA wallets, which automatically execute transactions through smart contracts to provide users with an additional level of security.
He added that secure multiparty computation (SMPC) is another emerging trend that increases the security of cryptocurrency wallets by allowing multiple parties to compute functions together while keeping their inputs private.
“Within the context of encrypted wallets, SMPC can facilitate secure distributed key generation and management functions without exposing individual keys to risk,” he explained.
The development of decentralized identity (DID) solutions also aims to make the authentication process more secure by allowing users to verify their identity without revealing personal information. Integrating DIDs with cryptocurrency wallets can help prevent identity theft and fraud.
Closure
Despite the recent decline in cryptocurrency crimes, protecting cryptocurrency wallets remains crucial to the safety of digital assets. New scams and hacking techniques constantly threaten individual users.
Important steps to improve security include choosing the right wallet type, using strong passwords, enabling two-factor authentication, storing private keys offline, and regularly updating your software.
Additionally, as the industry evolves, new advances in cryptocurrency wallet security offer more robust options to protect your investment, including the introduction of biometric authentication, secure multiparty computing (SMPC), and decentralized identity solutions.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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