The news of hacking cryptocurrencies is heard at least once in a month in many countries. Cybercriminals are earning huge profits from hacking crypto spaces and assets. The huge amount of money is attracting more cyber criminals to target cryptocurrencies. Such incidents are stopping many investors from depositing their money in cryptocurrencies. It has also led to a decrease in the demand for cryptocurrencies, minimizing their value. The worst part is that once your cryptocurrencies are stolen, you cannot get them back as the transactions in a blockchain are irreversible.
It is not possible to completely erase cyber crimes from crypto space. As cryptocurrencies are turning out to be mainstream, more investors will be focusing on them in the future. Therefore, you must know to protect your digital assets from cyber crimes.
What are the common threats that affect cryptocurrencies?
Cryptocurrencies consider blockchain as their backbone, which is a digital ledger used to store transactions. As blockchain is decentralized and does not require intermediaries to execute transactions, it becomes a favorite spot of hackers because they get to find loopholes in the technical infrastructure used in online trading platforms and crypto exchanges.
Vulnerabilities may happen in many ways like simple bugs, design flaws, etc. No proper understanding of cyber crimes among investors and a lack of proper security measures attract more hackers.
What are the storage choices needed for protection?
Some of the popular storage options used by investors to protect their private keys and coins are hot wallets, cold wallets, and custodial wallets. An average crypto investor uses a custodial wallet as their default storage option because most of the assets are possessed and operated by different crypto exchanges.
Offline hardware wallets are called cold wallets and they are considered to be one of the safest options to hold cryptocurrencies. It is a completely external storage device that is not connected to the internet. On the other hand, hot wallets are connected to the internet through web, mobile, or desktop applications.
Crypto wallets use blockchain or ledger to store digital assets and wallets will be responsible to manage the private keys that help users to handle their digital assets. Hot wallets will store these private keys on local devices, while cold wallets are not connected to the internet, which restricts hackers from getting access to the keys.
While custodial wallets are controlled by third parties, users get complete control over their assets in non-custodial wallets. Thus, there won’t be any threat of unauthorized access to any of your account information. Hot wallets ask users to be technical experts while cold wallets do not require it. Hot wallets of centralized crypto exchanges used to store various crypto assets, use labyrinthine registration as well as verification process along with huge trust in the company that they will not cut away the user from their digital assets.
The safest option for crypto storage is offline wallets that are used by both crypto exchanges as well as individuals.