Crypto-security guide: how to save your virtual assets
Crypto-security guide: how to save your virtual assets
Cryptocurrency has forever changed the reality of financial transactions, but the security of virtual assets is still a sensitive issue. In the first seven months of 2023 alone, hackers stole about two billion dollars in cryptocurrency.
As the regulatory environment for cryptocurrencies remains rather watered down, government-backed attacks have increased, and cybercriminals are constantly finding new ways to infiltrate private and business systems, the threat of significant losses in the cryptocurrency world is very real. Everyone involved in buying, selling or exchanging cryptocurrencies needs to protect themselves by taking effective security measures.
FATF (Financial Action Task Force) is one of the most important elements in the field of cryptocurrency security because it develops standards for global anti-money laundering (AML) laws. FATF experts were early advocates for protecting the cryptocurrency market from money laundering and terrorist financing, and their 2015 anti-money laundering guidance played a key role in the development of many of today’s cryptocurrency protection regulations.
Much of FATF’s active interest in cryptocurrency stems from the fact that transactions of this nature are highly attractive to criminals. Because individuals and companies wear alternative names when using virtual assets, criminals believe they can operate at a level of relative obscurity.
One of the FATF’s most important anti-money laundering measures is the “Travel Rule,” which requires virtual asset service providers (VASPs) to send, receive and verify information when facilitating cryptocurrency transactions. The FATF guidelines also require VASPs to hire AML compliance officers. These employees help identify potential fraud and money laundering cases, conduct and assist with audits, train staff, and report criminal activity to authorities.
How to protect your crypto assets
Protecting your cryptoassets takes a little time, but such an expense is more worthwhile than investing in the resources needed to reduce your wallet’s level of risk. Cryptocurrency can be a safe investment if you take the necessary steps.
Use exchanges responsibly
Decentralized finance (DeFi) platforms are particularly vulnerable to the work of cybercriminals. This means that investors should exercise caution when choosing and using cryptocurrency exchanges.
Risks of cryptocurrencies
Digital currency exchanges are a popular and potentially safe way to buy, sell, and trade cryptocurrency. However, these exchanges present risks in different ways:
- DeFi platforms are based on open-source code that anyone can view. This gives attackers ample opportunity to examine the code and identify vulnerabilities.
- Fraudsters create fake exchanges, often with minor URL changes, to trick investors.
- The money you keep on the stock exchange is not insured by the Federal Deposit Insurance Corporation (FDIC). If the exchange goes bankrupt unexpectedly, you may not be able to get your money back.
- If the exchange is hacked, your funds may be stolen.
Ways to reduce currency risks
The fact that exchanges involve risk does not mean that investors should not use them. Rather, they should proceed with caution by taking two important steps.
First, research the exchange thoroughly to determine whether it is safe. You can assess the risks by checking: URLs, availability of certificates, KYC protocols, team members.
In addition to doing your analysis, you should also avoid storing your cryptocurrency on the exchange itself. Instead, move your funds to a safe wallet so that they are protected if hackers decide to attack the exchange.
Choose a secure network
The network you use to access a digital exchange is just as important as the exchange itself. Avoid using public Wi-Fi, such as in a library or café, when you buy or sell cryptocurrency. Choose a secure Internet connection and, if possible, a virtual private network (VPN).
Choose a safe wallet
When choosing a cryptocurrency wallet, there are two main categories available: hot and cold. While you can store your cryptocurrency in either one, they have different advantages in terms of convenience and security.
Hot wallets come in the form of downloadable desktop apps, web wallets and mobile wallets. They are convenient to use because they are connected to the Internet, and some types can be accessed from anywhere. Unfortunately, this convenience comes with a higher risk of hacking and infiltration.
Cold wallets, on the other hand, do not have an internet connection and therefore are not as easy to hack. Hardware wallets, the most popular type of cold wallets, are individual devices that can be connected to a computer through a USB port. Safe storage of these hardware wallets is crucial. If you lose the device, you also lose your cryptocurrency.
Protect your wallet keys
Regardless of which cryptocurrency wallet you use, you need to properly manage and protect your wallet keys. Keys are generated by wallet providers and give you access to your funds. Without a key, you cannot log into your wallet. If other people somehow obtain your keys, there is little to stop them from stealing your cryptocurrency. Take the following steps to prevent any of these scenarios from occurring:
- do not access your wallet on a public or work computer;
- use your personal email address when setting up your wallet;
- never disclose your wallet information to others;
- keep multiple copies of your wallet key in different places, such as your personal safe or a safe deposit box.
It is also wise to split your cryptocurrency into several wallets. If one wallet is comprom