In 2022, hackers stole a record $3.8 billion in hacks, representing a 15% increase on 2021. This is a significant figure and aptly demonstrates the issues crypto investors and traders face.
If you’re not taking active steps to protect your investment, you’re going to find yourself in a whole world of trouble. The problem is that there is no magic formula that you can use to do this; it involves a careful strategy with a lot of different elements.
To make sure this doesn’t happen, we’ve put together this comprehensive guide, which will reveal key data protection strategies and tools for crypto investors and traders.
Common cybersecurity risks
Before we take a look at the different ways of protecting your crypto assets, you need to understand the common cybersecurity risks that you’re up against.
Account security
It’s vital to understand that you’ll be using a ‘private key’ to access your digital assets. This is a complex password code. A lot of individuals store their private keys on their devices, but there’s always a risk with this. After all, if someone was to gain access to your device, they would be able to log into your digital account using the private key.
The trouble is that once the private key has been stolen, you’re not going to be able to get your cryptocurrency back because cryptocurrency is not heavily regulated. Only you can keep your private keys out of a hacker’s hands, which is why these cryptocurrency tips are a must.
Malware
Crypto-malware is a type of malware that enables unauthorized users to mine coins using someone else’s server or computer. One of two methods are typically used to infect a person’s computer:
- Cybercriminals inject malicious code into ads or websites. When someone interacts with the website or ad, the code runs, giving the hacker access.
- Victims are tricked into installing malware code onto their devices using phishing-like tactics.
Third-party applications
Some crypto investors manage their digital assets with third-party software or applications. For instance, it’s common for investors to utilize crypto tax reporting services, but this can open them up to further cybersecurity risks.
Illegitimate trading platforms
As cryptocurrency is still in the infancy stage, new trading platforms are coming onto the scene. Unfortunately, not all of these platforms are legit.
Phishing attacks
Phishing involves hackers using tactics to appear like a reputable business, such as a crypto trading platform, to get in touch with users and get their valuable information. Sometimes this can involve the user forwarding their login details or clicking on a suspicious link. Hackers depend on phishing scams to get users to hand over their digital assets. Common phishing attacks used by hackers include:
- Fake browser extensions
- Phishing bots
- DNS hacking
- Spear phishing
Data protection strategies crypto investors should know
As you can see, there are many different threats that crypto investors face, and these threats come from all angles.
Abide by CCPA and other privacy laws and regulations
There is only one place to begin, and this is by adhering with all of the privacy laws in place. If you adhere to these laws, you’ll be taking proactive steps to protect your investment.
A prime example is CCPA. What does CCPA stand for? CCPA is the California Privacy Law. If you don’t comply with CCPA, there are big penalties in place, including sizable fines, such as $7,500 per offence for willful offences, $2500 per offence for negligent mistakes, and $2000 per offence for mistakes.
Furthermore, you’ll be leaving yourself wide open to a potential breach if you don’t follow the rules and regulations in place. After all, they’ve been implemented for a reason.
Buy Ethereum, Bitcoin, and other coins from reputable sellers
Next, you need to make sure you’re doing your due diligence when purchasing cryptocurrency. Buy Ethereum, Bitcoin, and other coins from sellers with proven reputations.
Because cryptocurrency is highly sought after, there are new exchanges and sellers cropping up all of the time. However, you need to be mindful because not all of these new platforms are legitimate.
Take your time to perform due diligence. Do research to make sure the seller is legitimate. Read reviews that have been left by others and look out for critical trust signals.
Use two-factor authentication for your exchange
Next, it’s a good idea to use two-factor authentication for your exchange. This means using more than one method to access your account.
Passwords are no longer sufficient. If someone was to guess your password, they’d be able to hack into your account and steal your investments with relative ease. This is why it’s a good idea to put another layer of security in place so that it’s not so easy for someone to get into your account.
There are many different types of authentication you can use. This includes everything from inputting a code sent to your mobile phone to fingerprints and other biometrics.
Secure your seed phase
One of the most important things you need to do is store your seed phase correctly, which is also known as the recovery phase. This is a 12-word phrase that enables you to recover your crypto on another device. Therefore, it’s vital that you store your security phrase correctly, so no one else can access it.
There are numerous schools of thought in terms of storing the seed phase. One way is to memorize it. Other recommendations include storing it in several different locations, such as multiple fireproof sales, and splitting up the 12-word phrase.
Another possible option for your seed phase is encrypting it and storing it in a password manager. Alternatively, you can store parts of it in a number of different password managers.
Ultimately, you need to ensure that your seed phrase is managed effectively. Make sure you never give it out via email, over the phone, or to anyone who asks.
The best data protection tools for crypto investors
Now that you have a better understanding of some of the different approaches you can use to protect yourself when investing in cryptocurrency, let’s take a look at some of the best tools on the market to assist in the process.
- A hardware wallet is a must if you want a secure and safe way of storing your cryptocurrency offline.
- A secure crypto wallet is a must to ensure you can control your private keys properly and have peace of mind.
- Anti-virus software will provide a strong line of defense, protecting you from the likes of trojans, malware, and ransomware.
- A password manager is a good idea because it enables you to store all of your sensitive data and credentials.
- A VPN is one of the most valuable cyber security tools you need. This will encrypt your data and hide your IP address while you’re using the web.
- Anti-malware software is used for detecting, preventing, and removing malware from your devices. As explained above, malware is a real problem for crypto investors today, so it’s imperative to have software that protects you from the likes of worms, spyware, and adware.
There are specialist data protection tools available as well, which have been designed specifically for the cryptocurrency industry. A couple of examples include:
Civic has a great reputation when it comes to the range of compliance tools they provide. They enable NFTs, blockchain networks, DeFi protocols, and cryptocurrency businesses to meet all of the AML and KYC criteria. You can connect all of your collections from numerous wallets in one place, ensuring a convenient and effective solution. Civic also enables protocols to distinguish between bad and good actors while creating verifiable human identities on-chain while protecting your privacy.
We also have ConsenSys Diligence, which is a smart contract and blockchain security audit company that assists businesses in maintaining their Ethereum decentralized applications. This solution will evaluate smart contract business logic and assess potential risk vectors. It ensures continual smart contract verification, as developers change code, and it prepares Ethereum dApps for launch by scanning code for vulnerabilities.
Keep your investment protected to ensure a profitable future
So there you have it: everything you need to know about keeping your investment protected so that you can enjoy a profitable future.
As crypto is highly regarded, it’s no surprise that hackers are increasingly targeting this space. This is why you need to do everything in your power to protect your investment and ensure they’re not able to gain access to it.