Potential Cyber Threats to Bitcoin and Crypto Wallets: How to Avoid Them
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Don’t assume e-wallets are digitally secure by default. While the majority of the developers have taken all the necessary steps to make them more resilient against hackers, ultimately, a large portion of responsibility for your own security falls on your shoulders.
Hackers can still compromise e-wallets, both crypto and regular ones, and often it’s the users’ carelessness that makes their wallets an easy target. But since you’re here, obviously you would like to take the steps necessary to protect yourself.
Before learning how to make a stand, however, you’ll have to learn the most common ways hackers can get their paws on your financial resources and compromise your digital storage. Let’s look at some of these now.
Situation 1
Your private key gets exposed
Your private key is called private for a reason; you should keep it to yourself.
Note: this applies only if you’re using a local wallet and not an online service. So if you’re not interested in storing your cryptocurrency locally, you can probably skip this section.
Sometimes, however, getting your private key stolen may not be entirely your fault. Someone may hack into your email or cloud storage account where you keep your passwords or intercept it through an unsecured public Wi-Fi network. Some people like to store their private keys on a physical piece of paper, which sometimes gets read by a tech-savvy individual who then proceeds to empty your wallet.
How to avoid it
If you’re storing your private keys online, make sure to apply an additional level of encryption to them. The same principle applies if you’re storing them on your local machine. For those who are extra careful and store keys on a piece of paper, make sure to keep it in a safe place. Also, make sure to install a Virtual Private Network which encrypts all the traffic that you send online. That way, no one will be able to intercept your key by snooping on your web traffic.
Situation 2
A third-party wallet provider gets compromised
Do you remember how NiceHash got hacked? The hackers managed to get away with $64 million worth of Bitcoin. By compromising an employee’s laptop, they penetrated inside, looting customers’ wallets in the process. As you can see, the chain is only as strong as its weakest link, and a disaster can befall even the strongest of providers.
How to avoid it
Stick to the reputable e-wallet providers exclusively. Alternatively, you can also use wallets that store your funds locally (in this case, however, you need to take additional steps to protect them yourself).
Situation 3
A recipient’s Bitcoin address gets spoofed
Sometimes a hacker can infect your PC with malware that alters the contents of your clipboard. What does this mean in practical terms? Well, if you were to copy and paste a Bitcoin address, for example, it may get altered in the process. In other words, the legitimate address can get swapped with the one that belongs to the hacker who infected your computer or smart device.
Here’s another fact: Bitcoin is not traceable, and once sent, there is no way of recovering it if something goes wrong. A hacker can try to mimic a legitimate cause (such as a charity) and trick you into willingly sending funds to their Bitcoin address.
How to avoid it
Double-check that the address you’re planning to send the funds to is the right one.
Situation 4
A wallet provider runs away with your money
A fraudulent company may offer a new service that allows you to store your Bitcoin in an account you open with them. An exchange or a market is a good example of this. While nothing may seem off at first, all of a sudden, the company may disappear into thin air, taking all of your precious funds with it. These companies often try to get away with an excuse that they were hacked, but in reality, it’s nothing more than a cleverly designed scam to alleviate you of your hard-earned cash.
How to avoid it
Think twice before you entrust your money. If a company is new to the scene, you’re well within your rights to take it as a warning sign and tread with caution.
Conclusion
In the end, a good portion of your fate is what you create for yourself, which includes your online security and the safety of your funds. You now know how to recognize some of the dangers associated with online wallets, what to be wary of, and how to steer clear of danger.
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Disclaimer: The opinions of our guest writers are solely their own and do not reflect the opinions of The Daily Hodl. These opinions expressed are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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