Security Measures for Cryptocurrency Owners
Cryptocurrencies have so far become one of the most innovative forms of technology. They bring all the perks of new-age innovation to the financial space, essentially allowing people to make quick, anonymous, and much cheaper transactions that can travel over long distances.
Since breaking out on the scene in 2008, Bitcoin has been able to achieve a value close to $10,000 per token. At the same time, several other altcoins have seen surges in their prices as well. cryptocurrencies have finally solidified themselves as part of our financial system, and there’s truly no stopping them at this point.
While they do bring a wide array of benefits, there are also some risks for you to keep in mind. Of course, the first thing that most crypto detractors point out is the fact that cryptocurrencies remain unregulated and have a past with helping criminals to launder money.
In truth, there are a lot of countries that have failed to regulate cryptocurrencies to this day. However, this hasn’t stopped the assets from being even more practical and useful – even in those countries! As for the issue of criminal activity, pretty much the same thing can be said about traditional cash. Money laundering has been around long before Bitcoin was invented, and it will be around for as long as money exists.
Then, there is the risk of security. Most cryptocurrencies are stored on exchanges or individual wallets. However, like traditional bank accounts, there is the propensity for these asset custodians to suffer hacks.
In fact, there have been some significant hacks in the history of the crypto space.
Lon Wong, the President of the NEM Foundation, called it the largest theft in the history of the world. While that might be debatable, this hack remains the most significant in the crypto space.
Mt. Gox: 2011 to 2014
Another significant hack was that of Mt. Gox, a Japanese exchange that was the largest in the world at the time. In 2013, a staggering 70 percent of all Bitcoin exchanges in the world happened through this platform. Still, even then, the platform had developed some significant troubles.
The first major hack of Mt. Gox happened in 2011. At the time, 80,000 BTC was stolen from the exchange’s founder Jed McCaleb, as he tried to sell the exchange. A hacker was able to get into McCaleb’s account and use admin access to artificially drop the price of Bitcoin from about $17 to $0.01. this allowed for the transfer of about 2,000 BTC before the attack was found.
However, the most significant Mt. Gox attack happened between 2011 and 2014. At the end of those three years, information came out that the exchange had no funds in its cold wallets. About 850,000 BTC was stolen from the exchange within those three years, of which users owned about 750,000. At the time, the value of the entire stash of Bitcoins stolen as $469 million.
To be fair, there have been other significant hacks in the crypto industry since then. However, it’s also worth noting that events such as these have caused exchange operators to be more careful with how they operate their platforms. Security features have improved markedly since then, so the chances of such a hack happening again are, quite frankly, slim to none.
However, there is always the risk of a hack. Almost everyone who goes into cryptocurrencies has a clear understanding of that. So, it’s worth understanding how you can help yourself and keep you safe.
While exchanges like StormGain, Binance, and Coinbase are known for their high levels of security, cryptocurrency holders can also take some steps to be safer.
Hardware Wallets: The Only Way Out
So far, one of the best ways to keep yourself safe is to store your valuable coins in a hardware wallet. A hardware wallet is essentially a physical device that stores your wallet keys. It’s not connected to the Internet, so there is no risk of someone hacking anything.
Most experts advise against storing massive amounts of cryptocurrency on an exchange or in any digital wallet app. All of these offer attackers various inroads to try infiltrating your wallet.
Hardware wallets cost no more than $150, and you can set them up quite easily. They also work great because you can recover a lost wallet and the details that it contains quite easily. So, you have all of the things you need in one place – easy handling, easy setup, optimal security, and a clear path to recovering a lost wallet.
With a hardware wallet, the only significant threat that you might end up suffering is if the details get in the hands of the wrong person. Keep your wallet well and you have no problems.
Another downside is that hardware wallets make transactions less quick. You can’t get a hardware wallet to issue transactions as quickly as the ones connected to the Internet. So, if you’re the type of cryptocurrency owner who prefers to make transactions regularly, you can transfer some assets from your hardware wallet to a digital one. At the very least, this minimizes the risk you are exposed to.