Cryptocurrency News

Crypto Wallet Security in 2021

By January 27, 2021 No Comments

Over the past few years, cryptocurrencies, specifically Bitcoin, were in rightful contention for the title – word of the decade. While that may have gone by the wayside, there is no doubt that digital coins marked the second half of the past decade and are slowly changing the world. 

While many thought that Bitcoin and its competitors would never reach the price-peaks attained in late 2017, throughout 2020, cryptocurrencies experience a surge in popularity that led them to surpass previous all-time highs. Thus, many casual internet users wonder if they should jump on this bandwagon and what kind of security assurances do most digital money provide?

If you are a newbie, you can check out cryptocurrency wallets for beginners here,  or you can read through our article and find out how safe your funds are in a digital pocketbook. 

The Best Crypto Wallet to Use

When considering a crypto wallet, you should know that they divide into software and hardware ones. The latter often get referred to as cold ones and are the most secure option for keeping coins, especially if you aim to do so for long periods. Unlike software wallets, they have no connection to the internet and are software installed on a physical device such as flash drives or desktop computers. They are virtually unhackable.

Trezor is the most famous cold wallet. It and its cold competitors generate public and private keys via random number generators. These get stored on the device. Even if such a wallet gets connected to an infected computer, its data will remain uncompromised. They let you set a PIN code and a recovery phrase, which you will need to regain control of a lost device. Their main drawback is the risk of internal software failure and the threat of physical theft.

When it comes to software wallets or hot ones, Blockchain is the most popular option. It has over 65 million users and name-brand association on its side.  Exodus is a closed-source free wallet that’s a decent choice for beginners. Electrum is a good option for advanced Bitcoin only users who want customizability and an easy to navigate interface. Know that the most popular storage alternatives are unlikely to house unestablished currencies, but they boast better hot wallet security than niche ones.

Security Features That Make a Difference

Before you decide on a crypto wallet, if security is a priority, you’ll have to make sure that your chosen option has most of the following features. Firstly, you want to be able to access your wallet only from a list of trusted devices. It is a simple feature that most online accounts allow these days. If a device that is not in such a directory tries to gain control of your coins, it has to identify itself. Furthermore, it is super-beneficial to whitelist withdrawal addresses, a handy feature that stops hackers from taking funds out of your pocketbook, even if they have gained access to it. So look for your wallet to have it. 

Multi-factor authentication is another must. 2FA or two-factor authentication has become the industry standard. It adds an extra layer of protection by only allowing access after users present secondary evidence that confirms their identity. However, look to go a step further and take advantage of biometric authentication. It incorporates fingerprint and retina scans that not only provide privacy but also eradicate digital fraud. Always use such a multi-signature feature, and if your wallet gives you a series of seed words, make sure to back those up. 

Security Issues You Must Pay Attention to Most

While the subject of crypto security most revolves around keeping private keys away from prying eyes, the topic should be vaster. The conversation should include how coin transfers happen and what can lead to the hijacking of funds. 

Phishing is a practice that has been around since the dawn of the world wide web, and it entails tricking people into using malicious sites or software that appear legitimate.  Scammers go so far as using Google ads to advertise fake sites that steal login credentials.  In 2018, hundreds of Electrum users lost close to a combined million dollars in a hacker attack that tricked them into providing their password information via a fake upgrade.

Wallets that run on a desktop OS are vulnerable to malware compromising crypto transactions.  The reason for this is because operating systems for desktop computers are targets of large surface attacks. Thus, such users are most susceptible to malware, which can steal their private keys, among other things. Browser extensions can be especially harmful, targeting and attacking browser-based wallets.

Other tips that can help you conduct safe transactions include being aware of address spoofing, making sure your software gets frequently updated, minding your digital hygiene, and not boasting about your crypto wealth.