For the last couple of years, Bitcoin and cryptocurrencies have made headlines all over the world, especially when Bitcoin hit an all-time high of near $20,000 in December of 2017 generating massive public interest in the field of cryptocurrency and blockchain technology.
This is all due to the revolutionary technology that Bitcoin has brought to the world, the first real-world implementation of the blockchain technology relies on peer-to-peer (P2P) payment transaction that involves no middlemen in the process such as banks or governments.
But unfortunately, this has also brought the attention of cybercriminals and crooks of all kinds into the scene. In fact, fear of hacks and wallet theft is investors’ main concern when it comes to investing in the cryptocurrency space.
There’s no doubt about it, there’s great risk involved in the cryptocurrency space, scams pop up on almost a daily basis, governments and other institutions are still figuring out how to regulate this thing, so it’s still like the wild west out there.
But fortunately, you don’t have to avoid this space altogether, there are some safety measures that can help protect your precious digital assets or cryptocurrencies.
1. Don’t keep your cryptocurrencies in exchanges
When you’re just getting started in this whole cryptocurrency space, you will likely be going to find yourself using exchange platforms like Poloniex or Binance to buy the many other available cryptocurrencies or altcoins.
And that’s okay if you’re planning to day trade or be involved in more frequent trades, the only problem is you shouldn’t leave your coins there if you’re a mid or long-term investor.
Why is that?
Not long ago, a popular Tokyo-based exchange called CoinCheck got hacked and nearly $500 million worth of digital currencies we’re lost. Guess who owns those tokens? traders of hacked exchanges who keep their coins in exchanges (also called hot wallets) are usually the victims of these kinds of hacking incidents.
So if you don’t want that happening to you anytime soon, you should generally keep your coins off exchanges — especially if you’re thinking of holding them for longer than 6 months.
2. Keep your coins in cold storage
As mentioned earlier, you should never rely on a third-party to keep your coins safe. It’s just too risky. So what should you do instead?
Smart investors know how to protect their digital assets, they rarely leave their coins in exchange platforms, instead, they store their coins in offline, dedicated hardware storage devices such as Ledger Nano S or Keepkey.
Hardware wallets, such as the one shown in the picture above, are considered to be one of the most secure ways to keep your digital assets safe.
Since these hardware storage devices aren’t connected to the cloud and are offline, they can be much safer from hacking attempts than other cryptocurrency storage options.
3. Always use Two-Factor Authentication
In a world where cybercriminals are always evolving and looking for their next victim, a funny username and a strong password are no longer enough to keep you safe.
Two-factor authentication (or 2FA) is an added layer of security technology where a user must enter a random time-sensitive 6-digit code to be able to login to an exchange or a website. This is one of the easiest ways that you can do right now to protect your digital assets.
You only need a smartphone device, and a two-factor application such as Google Authenticator to have the option of using this security technology on exchange platforms and other websites.
4. Keep your coins in different wallets and exchanges
Now if you must keep your coins on hot wallets of exchange platforms for trading purposes, then one of the safety measures that you can take to protect your digital tokens from getting hacked is by separating your token capital to different exchange websites and wallets.
This way even if one exchange or wallet got compromised by hackers, you won’t suffer in a major way since your cryptocurrency investments will be spread over different exchanges.
5. Beware of phishing scams
Some cybercriminals nowadays are heavily dedicated to scamming cryptocurrency investors, since this industry is still new and unregulated, it makes for the perfect playground for hackers as it can be pretty lucrative.
These cybercriminals will scam investors using strategic phishing attempts to get access to users’ sensitive information such as their wallet private keys that can then be used to steal their funds.
These hackers also use other sophisticated phishing scams such as tricking people into visiting the wrong website address that looks similar to the legit one.
Wrapping It Up
If you’re an investor in the cryptocurrency and blockchain technology space with a long-term mindset, you will have to take all the necessary precautions to protect your precious cryptocurrencies that could be worth millions of dollars one day.
Plus, you can also protect your transactions with an advanced encryption VPN service.