Crypto Security: The Best Practices To Secure Digital Assets

In a world where digital assets hold immense value, crypto security should be the utmost priority to safeguard them.

As cryptocurrency continues to grow, so do the challenges related to its transactions and storage, including hacking attempts on crypto exchanges or scams targeting crypto wallets.

In this blog, we will explore the various aspects of crypto security that we can implement to ensure the safety of our digital assets.

What is Crypto Security?

Crypto security refers to measures and practices deployed to protect digital assets from unauthorized access, scams, and theft.

It covers various aspects, such as securing the private keys of crypto wallets, employing new authentication methods, and reducing the risks associated with crypto exchanges like phishing attacks, hacking, and fraudulent schemes.

Additionally, crypto security is something that needs to be taken care of by both the facilitators (exchanges and wallets) and the users.

Furthermore, basic yet still effective components of crypto security are enabling 2-factor authentication, creating strong passwords, exercising caution in every activity, and many more.

Cryptography Process

Cryptography involves the use of mathematical equations to send encrypted text and decrypt it upon receiving it to ensure authenticity and confidentiality.

• Key Generation: The basis of security is where two types of passkeys are generated: one is a public key (widely shared), and the other is a private key (kept secret).
• Hashing: Cryptography uses the hashing function to change any data into a unique string of characters (hash).
• Digital Signature: Similar to signing a document, digital signatures verify the authenticity and origin of the message.
• Encryption: Cryptography uses the public key of the receiver to encrypt the messages (hash), making them unreadable to anyone not having those specific private keys.
• Decryption: The private keys of the receiver come in use to decrypt the message received with the public key, allowing them to access original and confidential information.

Basic Crypto Security Measures

• Use a reputable crypto wallet, preferably a hardware wallet.
• Use multi-signature, which requires multiple approvals for transactions.
• Secure private keys and recovery phrases in multiple physical locations.
• Use 2-factor authentication (2FA).
• Don’t share your credentials, especially when someone else promises to make a profit on your behalf.
• Use decentralized financial platforms (DeFi) and conduct research on smart contracts.
• Make sure to use new network security protocols like WPA3 and avoid public WiFi altogether.

Advanced Crypto Security Measures

• Multi-Signature Wallets: Multi-signature wallets add an extra layer of security by requiring several private keys for every single transaction.
• HSMs: Hardware security modules provide hardware-level security for the private keys, ideal for large holdings of crypto coins.
• SSS: Shamir’s secret sharing splits private keys into multiple shares, and then to reconstruct the original private key, a threshold is required (3 out of 5).
• SMPC: Secure multi-party computation allows multiple parties to perform computations with their private data without actually revealing it. Particularly useful in DeFi apps where calculations involve sensitive information.
• Whitehat Hacking: Many crypto exchanges and wallets offer bug bounty, meaning rewards for identifying and reporting vulnerabilities in their projects.

Where can I Store Cryptocurrency Securely?

Crypto wallets can store cryptocurrencies securely; with the help of private keys, it ensures safety; and with the function of public keys, users can send and receive cryptocurrencies.

Now there are three types of crypto wallets:

Hardware Wallets

Hardware wallets are USB devices that can securely store the passkeys to cryptocurrencies offline, making them secure against hacks and malware.

This wallet offers encryption and tamper-proofing mechanisms to safeguard stored passkeys.

Software Wallets

Software wallets are application-based wallets on which users can store and manage their cryptocurrencies from computers and smartphones.

They only work when connected to the internet and offer the flexibility of instantly sending and receiving cryptocurrency.

Paper Wallet

A piece of paper where the user can store cryptocurrency passcodes in written, printed, or even QR code format.

Since it’s a cold storage solution, it is free from online threats but still prone to physical damage, being misplaced, etc.

Common Crypto Security Issues

• Phishing: Scammers do fraudulent activities such as creating fake websites or writing fake emails to lure people into giving their credentials.
• Hacking: Unauthorized access to the crypto wallet or exchange that might result in theft of the digital assets.
• Malware: Malicious software and links that are made to steal sensitive information from the user’s device.
• Pump & Dump: This scheme involves artificially inflating the price of low-volume crypto coins and then selling them when the prices start reaching saturation.

There are many more types of crypto scams in detail here.

FAQs

Q:1 What is a private key in crypto security?

The private key is a unique code used to access and manage your cryptocurrency holdings securely. It should never be shared with anyone to prevent unauthorized access to your funds.

Q:2 How can I protect my crypto wallet from hacking?

Use strong passwords, enable two-factor authentication, keep your devices secure, and never share your private key with anyone. Regularly update your software, and be cautious of phishing attempts.

Q:3 Can cryptocurrencies be stolen or hacked?

Yes, one can hack or steal cryptocurrencies. Therefore, It is crucial to secure your private keys, use trusted wallets, and be cautious of scams and phishing attacks.

Q:4 What is a hardware wallet, and why is it important?

A hardware wallet is a physical device that stores your private keys offline, providing an extra layer of security compared to online wallets. It is important to protect your cryptocurrencies from hackers and online threats.

Q:5 How can I recover my lost private key?

Unfortunately, if you lose your private key, there is no way to recover it. It is important to back up your private key securely to prevent the loss of access to your cryptocurrency funds.