The Crypto Crime Trends for 2022 report states that in 2021, the crypto-based crime reached an all-time high in 2021 with scammers taking home $14 billion. This is a significant jump over $7.8 billion in 202. Of all the cybercrimes, scamming and crypto theft were the most common categories of cyber exploits. According to the report, scamming alone led to $7.8 billion worth of cryptocurrency stolen from unsuspecting victims.
The most common form of scam in 2021 was rug pull. The simple term doesn't do justice to the elaborate scam that a rug pull is. As part of these scams, developers promoted what appears to be a legit crypto project. This involves setting up the whole infrastructure to raise investment before taking the entire money and vanishing from the face of the earth.
While these elaborate schemes are fast gaining pace and can be avoided by checking the white paper, plain-old brute force methods like hacking and phishing are still the most common bitcoin scams. More recently, the blockchain network of the popular Axie Infinity online game was the victim of one of the biggest crypto attacks ever with $600 million stolen by hackers.
When a large-scale and popular company can fall prey to such exploits, it’s natural to wonder how to safeguard our digital assets. Fret not, as we will walk you through the best tips to protect your crypto investment.
Pick a Reliable and Reputed Cryptocurrency Exchange
It goes without saying that anyone who wants to trade cryptocurrency needs to have a crypto exchange account to buy and sell digital currencies like Bitcoin, Dogecoin, and Ether. Most crypto exchanges have a fixed fee that they charge for every transaction; if you plan to do frequent transactions, then choose a platform that has a low transaction fee.
However, also look beyond fees and consider factors like cryptocurrencies on offer, trading volumes, security, and educational resources for new traders. It’s a must for any crypto exchange to have cutting-edge security technology in place, availability of the majority of crypto, and easy accessibility as well. If you are looking for such a crypto exchange, OKX fits all of these criteria along with a super educational blog with all sorts of articles to educate new traders.
Always Use a Cold Wallet
If you are wondering what a cold wallet is, let us explain. There are two kinds of crypto wallets - hot and cold, where the former is connected to the internet, and the latter is not. Therefore, a cold wallet is safe from all sorts of cyberattacks. It’s a good practice to store private keys in a cold wallet with strong encryption. For the uninitiated, private keys are used to access digital assets to make transactions, whereas public keys are shared with others for accepting payments.
One of the key examples of this is the theft involving the Japanese crypto exchange called BITpoint in 2019. Hackers stole $32 million worth of different cryptocurrencies from its hot wallet targeting over 50,000 users. BITpoint announced that its cold wallet and cash holdings were not affected by the incident. Therefore, it’s a good idea to store crucial assets and keys in a cold wallet, also called a hardware wallet.
Keep Changing Your Password
Ask any security expert worth his/her salt, and they will swear by the importance of having a strong password. A study revealed that 3/4th of millennials have the same password across devices, social media, and other apps in the US. The report also revealed that most of them were using the same password in more than 50 places.
It’s advised to set different and strong passwords for all your accounts, especially cryptocurrency exchange accounts. Use password manager apps like Apple’s Keychain or OnePass to keep track of your passwords. Also, double the security by opting for two-factor authentication (2FA) or multi-factor authentication (MFA).
Keep Multiple Wallets
Have you heard of the saying that goes, “don’t put all your eggs in one basket?” You can do so literally with cryptocurrency. One of the best things about cryptocurrency is that there is no limit to wallet creation. Therefore, you can diversify your cryptocurrency investments in different wallets. It’s advised to maintain at least two wallets - one for daily transactions and the other for the rest of your digital assets. This will not only protect your asset but also mitigate the risk of any cyber breach.
Use a Secure Internet Connection
It’s recommended to use an extremely secure internet connection when trading or making cryptocurrency transactions. Use only trusted and home networks to do these transactions and avoid public networks at all costs. Even when you are using a home network, do have a VPN connection enabled for additional security. It will spoof your IP address and location and thus keep transaction and browsing history private.
The cryptocurrency market is on a steady growth trajectory, which makes it extremely lucrative for cybercriminals. It’s your responsibility to take enough safety precautions for your digital assets. Use the tips mentioned in this article and also stay up to date with the latest security news, cybercrime types, and prevention methods.
