Purse Ho
If you have purchased cryptocurrency or invested in crypto assets, recent media headlines must have scared you.
In the month of January alone, there is a series of hacks of crypto companies, one of the most striking of which is the theft of digital currencies worth more than $35 million from Crypto.com, a platform where you can buy and sell bitcoin and other cryptocurrencies.
And what you need to focus on is protecting your crypto.
“So it’s a different paradigm from how we look at money today,” said Chris Kline, COO and co-founder of crypto investment firm Bitcoin Ira. “Either we have it tied to gold and we put it in a vault or we have it in a bank, which is FDIC insured and there’s this whole institution in the middle between you and your money .”
Crypto, Kline added, is “a paradigm shift to a more decentralized monetary system. And that means you can keep your crypto on wallets and such, but you don’t just want to leave it in risky places.”
The data is public
Past hacks have happened almost at the exchange level. If you leave your coins there, making it easier to buy and sell them, that’s when a hack on this exchange is compromised. Then you could be compromised.
The most exposed thing is your wallet address because this wallet address is known to everyone and can be queried by anyone. And your wallet is basically your key in the blockchain. All transactions associated with this wallet can be viewed by anyone. You can actually access the transaction and see exactly what was sent, where it was sent with just a few clicks.
“Most crypto users need to realize that their data is public,” said Nick Donarski, cybersecurity expert and founder of ORE Sys LLC. “So that’s both a benefit and a security risk.”
“If you’re not careful about what data or information you actually put on the blockchain, then you know that information is public to everyone who has access to it,” Donarski warned. “So good education, good understanding, good usage practices that you would normally have with your banking system, you know, strong passwords. Don’t share your private key.”
The security expert urges users to know what real data lives on the blockchain and what doesn’t.
Putting your coins in what is called a cold storage wallet is the best recommendation. It is a digital wallet that is not connected to the Internet. So if you don’t trade much and just hoard bitcoin you want to keep it safe, this might be a suitable solution.
There are the beginners of cold storage, which means that there are several stages of control and the keys are stored offline. That way, if something happens to Coinbase for example or Crypto.com, your coins are offsite elsewhere.
“The way I’ve always explained it is your checking account and your savings account. So most people have at least one or both, right? If you have a checking account, you have a debit card linked to it and that debit card should be lost if someone hits it or skims it or whatever, they can steal it and use it to buy things. You don’t want it tied to your larger sum of savings,” Kline said.
Do your due diligence
“So if you have $20,000 in savings, you don’t want a card linked to it. So most savings accounts don’t have a card linked and they stay isolated. And that’s an adjacent account as savings. Same concept with crypto, the crypto you want to trade otherwise is where you use these centralized exchanges, or put it in longer term storage. Now you can get out quick. It’s not like something like that is trapped there,” Kline added.
It is also necessary to take some precautions before investing or buying tokens. Experts recommend doing your due diligence and not just buying for fear of missing out (FOMO) for example.
You need to make sure that you take your time to actually look at what the token is, look at what the actual project is. Make sure the project actually has a purpose and make sure they actually have plans. There are nearly 13,000 coins listed, according to data firm CoinGecko. And pieces are created almost every day.
Among these tokens, there are many that are memes or mat pools. To avoid them, read their project, try to see if they have a website, if there are posts on social networks (Twitter, Reddit) and see what they reveal about the founders or creators. And above all, ask yourself what is the use of the digital currency that someone is trying to sell you or that you are trying to buy.
“Being in crypto means being in the hacker world. There’s money. If I can get into it, I can get somebody’s bitcoin,” Kline warned. Bitcoin Ira, his company, is “constantly under attack because people think if they can knock us down, they can come in and access crypto and move it into their wallet.”