How to Stay Safe When Playing With Cryptocurrencies

“Time heals all wounds,” were the words of Stefan Thomas coming to terms with the loss of $220m worth of Bitcoin earlier in the year. The German programmer had been gifted 7002 Bitcoins in return for an animation project in 2011, and few could have predicted how rapidly the cryptocurrency’s value would soar in the years following.

The Bitcoin had been stored on a secure IronKey device, which gives owners 10 chances to guess their password before encrypting the contents forever – with just two attempts left, Stefan has now locked the device in a "secure facility," in the hope of gaining access in future. As horrifying as Stefan’s story is, he is far from alone in having to deal with such an unfortunate reality. Currently, around $140bn worth of Bitcoin is lost or left in digital wallets than cannot be accessed as a result of lost credentials – reason enough for effective password management to be top of the agenda for those trying their hand at cryptocurrencies.

Digital currencies are volatile investments and owners are prone to countless risks, whether it is from poor online security practices or bad actors on the hunt for financial gain. But by building a strong foundation of good cyber-awareness, cryptocurrency owners can prevent their money from falling into the wrong hands – saving themselves many sleepless nights in the process.

Knowing Your Stuff Will Go a Long Way

You wouldn’t make a random purchase on a suspicious looking e-commerce site, or open a current account with a disreputable bank – the same should be true for cryptocurrencies. Prospective owners should do their homework on trading websites. After all, some currencies are more reputable than others and have been around longer, weathered storms or have built up a positive reputation in the community. Learn from other investors and proceed cautiously. Investors should also be mindful of the wallet they choose to store their assets, and make sure they keep on top of any key phrases or passcodes.

Hardware wallets act as an offline means of storing cryptocurrencies and are accessible through a 24-character key phrase. Here, users should be careful not to lose the physical device or lose track of any access codes – what’s more, a corrupted device could see the user unable to restore the contents. Meanwhile, software wallets allow users to store their information digitally, and act as an ideal solution for those trading in low volumes. Whichever option you choose, cryptocurrency owners would do well to store key phrases in secure, easily accessible locations – the alternative could lead to another headline of an owner locked out of their fortune after having lost their details.

Password managers are an ideal spot to store private keys and passcodes. Here, any credentials are heavily encrypted in a secure vault, synced to the cloud and accessible on any device, online or offline. What’s more, many now include additional security features, such as multi-factor authentication (MFA) and dark web monitoring tools, built-in. This helps to ensure cryptocurrency coins remain safe while within reach, and equip users with the tools to proactively stay on top of their online security posture.

Staying on Top of Online Security

In addition to choosing the right storage option, staying safe with cryptocurrencies relies on users practicing solid online security practices. Not all digital wallets offer two-factor authentication (2FA) or MFA, but try to choose options that do, and always turn it on when available. They make it much more difficult for someone to target your specific account and break in using, for example, a stolen password, as they’d also need access to a physical access token (typically your phone). The same advice is true for all other related services.

It should go without saying, but users should also be sure to employ basic password practices to help protect themselves online. This means using long, randomly generated passwords containing upper and lower case letters, digits and symbols and above all, using a unique password for every single online account. Additionally, password managers are invaluable tools for helping people keep on top of their passwords, storing credentials in a secure vault where they are organized and encrypted for safekeeping and ease of access.

Moving into the Future More Secure

Time will tell how the latest Bitcoin password nightmare unfolds. While many of us don’t play in the cryptocurrency space or with such large amounts of money, this situation reinforces that nobody is immune to a bad password. Keeping on top of various credentials and following security best practices will go a long way in securing our assets, and much of this begins with education. It is becoming an age old phrase, but is definitely worth repeating, security awareness must ultimately become a priority if we are to limit the number of password-related horror stories in future.

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