With all of the media attention that cryptocurrencies have received in the past month, it was logical that hackers around the world would increase their attempts to steal virtual money floating throughout the web. In late January, hackers stole close to half a billion dollars from the Japanese cryptocurrency exchange called CoinCheck.
Similarly, the blockchain trading company “Chain Analysis” believes that over three million Bitcoins have been lost due to hackers. Since the supply of Bitcoin is capped and finite, that means that upwards of 14% of this leading cryptocurrency might have been lost through hacking and theft.
Proponents of cryptocurrencies, however, will argue that when managed correctly, cryptocurrencies provide a much safer monetary alternative to traditional government-backed currencies. Furthermore, the complicated code encryption system makes cryptocurrencies almost impossible to counterfeit.
Nonetheless, theft through hacking has occurred and will only continue to occur in the years to come if bitcoin’s disgrace in cybercrime continues to rise. Below, we will look at a few ways that you can keep your cryptocurrencies safe from the increasing population of hackers.
Be Careful with Online Services
As the use of cryptocurrencies becomes gradually more mainstream, many new users are searching for easy to use cryptocurrency providers that do not require lots of work or an in-depth understanding of how blockchain technologies actually work. Many websites that claim to make managing cryptocurrencies easy enough for even the novice, actually store the cryptocurrencies online (known as a hot wallet). This allows security breaches to occur and is how most cryptocurrency theft has occurred in the past.
If you are not a computer expert and want a simple to use the wallet for your Bitcoin or other cryptocurrencies, make sure to find a wallet provider that offers cold storage wallets that are offline. You should only store a minimum amount of money in online wallets that you are planning to use in the short-term. This massive list of the best cryptocurrency wallets is a great resource to help you compare the best crypto wallets for your personal needs.
Keep Your Software Up to Date
This should be common sense, but many people simply ignore those constant reminders your computer sends you to update certain software and programs. Updating your Bitcoin wallet software will keep your money better protected as newer versions implement different types of safety measure to protect you against theft.
Always Opt for Multi-signature Wallets
For the Bitcoin novice, the idea of having some stranger sign off on a Bitcoin transaction of yours in order to validate the transaction might seem like an invasion of privacy that limits the overall safety and security of using cryptocurrencies. However, multi-signature wallets are widely considered to be much safer and more secure than other types of wallets.
Multi-signature features associated with certain types of wallets mean that each and every transaction will require multiple independent approvals in order to be verified. In other words, you will not be able to spend your money until various people check to make sure that the money is being spent in a safe and correct manner.