Basic methods of protecting cryptocurrency assets and transactions

How to best store cryptocurrency

One of the most reliable ways to protect cryptocurrency is to choose and use the right crypto wallets.

A crypto wallet is like an electronic wallet, except that instead of pounds or dollars, it stores cryptocurrencies (such as Bitcoin or Ethereum). Let's take a look at several types of e-wallets that increase the security of your funds.

Hot and cold wallets

Hot wallets are programmes or services that are connected to the Internet. They can be custodial (where private keys are stored by the service) or non-custodial (where only you have the keys).

Hot wallets are convenient for everyday cryptocurrency transactions — like a wallet in your pocket that you use to pay for things. However, they can be vulnerable to hacking, phishing, or malware.

Given the above, an important security consideration for hot wallets is token permission management. When you interact with decentralised applications (dApps), you often have to grant them access (permissions) to manage your tokens. Over time, these permissions accumulate, and some of them can be potentially dangerous.

That is why it is worth periodically checking and revoking unnecessary permissions through special services, such as https://revoke.cash. This allows you to revoke smart contracts' access to your tokens and reduce the risk of unauthorised withdrawals. This «cleaning» is basic crypto hygiene, like antivirus software for your assets.

Cold wallets are devices or media that are not connected to the Internet. If you use cryptocurrencies for the long term and do not plan to conduct cryptocurrency transactions frequently, the best solution would be to transfer them to a cold wallet, such as a special hardware device (hardware wallet).

Hardware wallets are not connected to the Internet, so even if your computer or mobile phone is compromised, the cryptocurrencies in your hardware wallet will remain safe.

For example, hardware wallets such as Ledger, Trezor, or paper wallets (QR code and private key on paper) are effectively isolated from online threats, so they are considered the most secure way to store cryptocurrency.

Multisig wallets

Another level of protection is multisig wallets (from «multisignature»). This type of wallet requires several keys to confirm a transaction — for example, two out of three or three out of five.

It's like a safe with multiple locks — to access the contents, several parties must simultaneously confirm the transaction. Multisig wallets are very convenient for:

- companies or teams where several people have control over assets;
- users who want an extra level of protection in case one of the keys is lost;
- protection against fraud and unauthorised transfers.

For even greater security, multisig wallets can be combined with cold storage.

Tips for secure cryptocurrency storage:

• Use cold wallets for large amounts or long-term storage.
• Keep small amounts in hot wallets for active use only.
• Consider a multisig wallet for joint asset management or additional protection.

This approach will help significantly reduce the risk of cryptocurrency loss, whether you are a private investor or a business representative.

How not to lose access to your wallet

A few more recommendations to help improve the security of your crypto wallet concern the seed phrase.

A seed phrase is a set of 12, 18, or 24 randomly generated words that gives you full access to your cryptocurrency wallet. It is your master key, which cannot be changed or recovered. If you lose it, you will lose access to all your crypto assets. If someone else gets it, they will be able to steal everything.

How to store your seed phrase correctly and securely:

1. Never store your phrase digitally.

• Do not take a photo of your seed phrase.
• Do not store it in a file on your computer, in the cloud, or in your phone notes.
• Do not send the phrase to yourself via email or instant messaging.

All of this is unsafe, because any connection to the Internet creates a risk of hacking or theft through malware or phishing.

2. Write down the seed phrase by hand — on paper or metal.
The best option is to write it down on paper and store it in a safe, secure place (e.g., a safe). An even more secure option is to use metal plates for seed phrases (e.g., Cryptosteel or similar), which are resistant to fire, water, and physical damage.

3. Make several copies and store them in different safe places.
For example, one copy at home in a safe, another in a bank deposit box. Do not store all copies in one place — this will help avoid loss due to fire, flooding or theft.

4. Do not share your seed phrase with others.
No one (not even the technical support of a crypto wallet or exchange) ever has the right to ask for your seed phrase. If someone asks for it, it is 100% a scam.

Other ways to protect cryptocurrencies from theft

In addition to choosing a reliable wallet, it is important to take a comprehensive approach to security. Below, we will look at additional ways to protect cryptocurrencies that will help reduce the risk of losing funds due to fraud, hacking, or carelessness.

• Use strong passwords and two-factor authentication (2FA). Текст

  One of the simplest but most important ways to protect your crypto wallets and accounts is to create strong passwords and enable two-factor authentication (2FA).

  A password is the first line of defence, and 2FA adds an extra layer of protection. This means that even if someone finds out your password, they will still need to enter a code that is sent to your mobile phone or generated in a special application (e.g. Google Authenticator) to log into your account.

  How to do it right:
  - Use complex passwords that contain uppercase and lowercase letters, numbers, and special characters.
  - Enable 2FA on all accounts where possible (crypto exchanges, wallets, email services).

• Be cautious when using public Wi-Fi.

  Using public Wi-Fi networks is another potential risk that cryptocurrency users often overlook. When you connect to an open network, malicious actors can intercept your data, including passwords and cryptographic keys.

  How to protect yourself:
  - Avoid conducting financial transactions or accessing important accounts while connected to public Wi-Fi.
  - If this is not possible, use a VPN (virtual private network) to encrypt your Internet traffic and protect it from prying eyes.

• Keep your software up to date.

  Like any other system, crypto wallet and exchange software requires regular updates. Manufacturers constantly release new versions of their applications that include vulnerability fixes and security improvements.

  Software updates help protect your wallet from new threats. Ignoring updates can leave your cryptocurrency vulnerable to attacks.

  What to do:
  - Install all updates for your wallets and exchanges.
  - Check for new versions of applications and programmes on official websites or in app stores.
  - Install high-quality antivirus programmes with premium packages.

• Be careful with phishing.

  Phishing is a fraudulent practice where attackers try to obtain your personal information (passwords, keys) through fake websites, emails or messages.

  How to protect yourself:
  - Always check the URL of the website you are visiting to make sure it is the official website.
  - Do not click on links in emails or messages from unknown sources.
  - Install antivirus software and additional phishing site blockers.

• Careful selection of cryptocurrency exchanges.

  Not all exchanges are equally reliable. Before choosing an online trading platform, it is important to carefully check its reputation:
  - Read user reviews and research ratings on independent platforms.
  - Ensure that the exchange uses modern security protocols, such as cold storage for assets, two-factor authentication, and regular security audits.

The mechanism for protecting transactions in the cryptosphere does not have to be complicated or expensive. By following basic rules, you can significantly reduce risks and ensure safe use of cryptocurrencies. The cryptosphere offers many opportunities, and your task is to use these opportunities as effectively and safely as possible.