Security has always been important in the world of cryptocurrencies, as assets are digital and can be vulnerable to hacker attacks. And it’s risky, even if such assets are used for gambling slots online or paying for subscriptions on reliable services. Accordingly, security measures should also be digital. Similar to real physical wallets that hold real banknotes, a crypto wallet contains its owner’s digital coins.
While a physical wallet can hold any currency, a single cryptocurrency wallet cannot hold all digital coins. Each wallet has a specific set of tokens with which it is compatible. This means that if assets are transferred to the wrong wallet, the sender loses the entire amount irretrievably. There are 5 varieties of cryptocurrency wallets:
Tips for Choosing Wallets
Choose a cryptocurrency wallet responsibly, considering several key aspects that will affect its reliability and usability. In any case, special attention should be paid to the level of security. Consider the following indicators:
- There should be two keys – private and public – and several access options. It is also better to choose wallets with several levels of security.
- It’s better to give preference to “cold” wallets. If you use coins for trading on exchanges or other purposes where fast transactions are important, you can keep the bulk of the capital in the account that isn’t used, rather than all of it.
- Every cold wallet turns into a hot one when it’s connected to the network. Accordingly, it’s better to choose wallets with the ability to change keys.
Other features are tailored to the requirements of each individual user. For example, investors and those who are set on long-term growth of the rate, it’s more convenient to keep tokens on hardware or desktop wallets. The main thing is that the computer should not be connected to the Internet. Moreover, one should never keep capital at cryptocurrency exchanges because they are the least reliable option to keep assets.
Ways to Protect Yourself
Any online platform has risks due to third-party connections. That said, cold wallets aren’t 100% safe either. There are numerous viruses that read key data and send it to third parties. Sometimes viruses don’t just access passwords but also install software that uses the computer’s power for hidden mining.
Antivirus programs don’t always cope with such malicious files, so the best protection is considered autonomy and control over what sites you open and what you download. Other options for protecting cryptocurrencies include:
- Encryption. The wallet gets password protection. This is the traditional option and provides the least amount of protection. It cannot provide a complete guarantee, as there are viruses to read keystrokes. Accordingly, every password can be cracked.
- Backup. Data that is used by changes in transactions is stored in different places and is not available to the user himself. A full backup of a crypto-purse is obtained.
- Multi-signature. This type of protection is optimal if the task is to protect an online wallet from hacking. The method implies that two people or a large number of users sign transactions. Multi-signature is used in business environments, when one account belongs to two, three or more partners.
What to Do if Your Wallet Has Already Been Hacked?
If the most unpleasant thing happens and your crypto-purse gets hacked, you don’t have as many options as you would like. If you have logged into the wallet and noticed that there are no tokens in the account, and you see unknown addresses in the transaction history – these are signs of hacking.
The essence of a digital coin is that it is owned by someone who knows the code of the wallet that contains it. Because of this, if tokens are stolen, there is no way to get them back. You can try to trace the address of the wallet where the funds ended up, but that won’t give you any information.
You can notify the company that provided you the cryptocurrency wallet. It’s possible that someone else was harmed by the hackers. You should change the security settings of your wallet, computer, and phone. It’s possible that their security has vulnerabilities.
If your savings were contained in a cryptocurrency exchange account that was attacked by hackers, you will have a minimal chance of getting compensation. To avoid such troubles, try to secure your main wallet and do not keep large amounts of digital assets in the exchange.