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How to invest

How to keep your crypto safe?

01 Aug 2022

Follow these tips to safeguard your crypto assets and lower risks of losing them.

How to keep your crypto safe?

What you'll learn

  • Why is it important to keep your crypto safe?
  • What you can do to keep your crypto safe?

TL;DR

  • The recent security breach on Crypto.com, which saw US$34 mn worth of crypto assets being drained, is just one of the many hacks in the crypto space over the past months.
  • Some safety measures can be implemented to safeguard your crypto assets and lower the risk of losing them.
  • This would include splitting your crypto portfolio, reviewing permissions granted, using hardware wallets, avoiding ‘free’ airdrops, and following cybersecurity safe practices.
  • Follow these tips and remain vigilant to keep your crypto assets safe!

Why is it important to keep your crypto safe?

There was a security breach on Crypto.com, one of the largest Crypto Exchange in the market, on 17th Jan 2022, which saw an estimated USD 33.8mil worth of crypto assets being drained from the clients’ accounts. 

This is just one of the many breaches & hacks in the crypto space over the past few months. 

Not only exchanges are vulnerable to such hacks, DeFi (Decentralised Finance) platforms are popular targets too. 

It was estimated that >USD 7.7bil worth of crypto assets were lost in 2021 alone

Security breach

  1. Blockchain is an emerging technology and its security aspects are still lagging behind.
  2. Hackers are very sophisticated nowadays and are able to exploit many vulnerabilities in the crypto space.
  3. Holding crypto in CEX (Centralised Exchanges) is not a 100% secure option as well, as seen from the recent hack of Crypto.com. 
  4. Interacting with DeFi platforms can be risky, particularly for those newer ones with very lucrative yields, low liquidity and/or low TVL (Total Value Locked – value of total assets being staked/locked in a specific protocol).
  5. Typically hacked funds are extremely hard to retrieve and are generally considered to be lost forever, with little that the individuals will be able to do. For cases of reimbursements from CEX or DeFi protocols, those are generally considered to be ‘goodwill’ and should not be considered as a safety net all the time. 

What should you do to keep your crypto safe?

Various safety measures can be implemented to safeguard one’s crypto funds and lower the risk of losing them:

#1 - Split your crypto portfolio across multiple exchanges, platforms and/or wallets 

  • It is usually recommended to hold your crypto in your own wallets instead of on a CEX. The exchange holds the private keys to your crypto, which poses a security risk if the exchange is hacked. 
  • There is a general saying in crypto: ‘Not your keys, not your coins’
  • Own wallets can include Metamask, Coinbase Wallet and Trust Wallet
  • Do read up on how these wallets work and ensure that your private keys are safely kept and not exposed online (never give anyone these keys)

Crypto wallets

#2 - Review permissions granted

For frequent users of dApps (decentralised applications), it is a good habit to review permissions granted and revoke those that are unused / will not be used in the near future. Such permissions might have backdoors which allow hackers or even the project developers to access your funds in your wallet. Some popular and trustworthy tools are as below:

Review permissions

#3 - Consider using hardware wallets 

  • These hardware wallets such as Ledger or Trezor are also commonly referred to as ‘Cold Wallets’ and offer much higher security as compared to ‘Hot Wallets’ such as Metamask (the most popular online wallet)
  • They are physical devices which keeps your crypto assets offline and are deemed the most secure method of crypto storage
  • Metamask can also be linked to Ledger as well, to add another layer of security as users have to physically connect the Ledger before being able to use Metamask for crypto transactions (buy/sell/transfer/stake/approve)

#4 - Avoid interacting with ‘free’ crypto airdrops

Avoid interacting with ‘free’ airdrop crypto that are sent to your wallets if you are not aware of such airdrop events. Most are ‘dusting’ attacks, where once a user can grant approval to trade these ‘free’ crypto, the hackers are able to access the wallet and drain everything. Do NOT sell them even if they ‘appear’ to be worth thousands of dollars. The best action would be to leave them untouched. 

#5 - Follow usual cybersecurity safe practices 

These would include practices such as changing passwords regularly, use 2FA, avoid connecting to free public wifi (without password), avoid clicking on suspicious links, etc.

Follow the tips above and stay vigilant to reduce your risk of being hacked!

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