The advent of cryptocurrencies has been a life-changing event for many people who have benefited in some way from the concept. Others have seen it as a ticket to bankruptcy and multiple asset losses that have set them back a mile on their path to success and wealth. 

Individual wallets, exchanges, crypto bridges, and networks are constantly under attack from security threats and hacks. A recent attack on Binance Network’s cross-chain bridge resulted in the theft of $570 million by hackers. This event also resulted in a sharp drop in the token’s price over the next 24 hours, as well as the network halted by the BNB Chain team. 

Attacks like these are reasons for you, as an investor, to be more security conscious and take the necessary precautions to protect your investment. Are you wondering how you can accomplish this? Here’s how to avoid unfortunate crypto-related losses:

Wallet Security

Since it provides access to a user’s assets and serves as the mechanism through which a user authorizes transactions, the crypto wallet is a crucial component of any venture involving cryptocurrencies. When a crypto wallet is compromised, assets can be accessed by foreign parties, which may cause a loss of money that cannot be recovered. 

As a result, protecting your wallet should be a top priority, and we have put together a list of the best precautions you can take.

Store Your Seed Phrase in a Safe Offline Location

In the event of device loss or change, the seed phrase is your only way to access or recover your wallet. Therefore, be sure to carefully store your wallet seed phrase in a safe offline location and in the precise order that it was given. Never take a photo with the intention of storing it somewhere other people can access it, such as a device or cloud storage. Avoid keeping it on your email, which is vulnerable to hacking, and instead, keep it in journals, safes, and other accessible, secure locations.

Make Use of Hardware Wallets (Cold Storage)

Many exchanges offer the option to purchase and own cryptocurrencies, as well as a wallet in which to store them. These exchanges provide varying levels of wallet security and transaction convenience, but they are not immune to hacks, cyber breaches, and crippling market downturns that can disrupt their trading and withdrawal operations. Because they are not an online-based device, hardware wallets are a safer option for storing cryptocurrency assets. 

A hardware wallet is only exposed when the private keys included with the wallet are compromised. By combining software wallets with hardware wallets like Trezor and Ledger, you can hold and trade cryptocurrencies with less risk.

Explore Security Options

Play your part by ensuring that wallet security features such as two-factor authentication are enabled and used at all times. Avoid using predictable passcodes or the same password across multiple platforms, as this can result in a mass compromise of your portfolios. 

Instead, use unique passwords, change them at random intervals, and use a password manager to keep track of password activities. To further secure your device, prioritize the use of email verification and other device protection features such as biometric signatures, facial IDs, and passcodes.

Use Secure Internet and Protect Your Device

To avoid pilfered login details when using software wallets to conduct crypto transactions, avoid public networks, WiFi, or cafes that are typically under-protected with little to no encryption protocols. Set up your security infrastructure by making sure your firewall and anti-malware software are operational, strong, and up to date. 

It helps to limit the number of devices on which you enter your login information and connect your wallet and protect your devices from both strangers and friends. Use a Virtual Private Network (VPN) to protect your connection and conceal your internet data and activities from potential hackers and network providers.

Crypto Trading Etiquette

Adequate wallet security is one thing, but many investors fail to take the necessary precautions when looking for new investment opportunities and transacting on web3 platforms. They frequently use unverified and unsafe platforms and do not go the extra mile to learn about new tricks and frauds in the market. 

Here are some trading etiquette tips to help you stay alert and aware of your surroundings:

Trade on Reputable Trading Platforms and Exchanges

Decentralized exchanges are essential for any serious investor looking to buy digital assets for fiat, convert one crypto for another, or conduct peer-to-peer transactions. These transactions have varying levels of security and can be hacked or breached. As a result, research the exchange with which you want to open an account and ask yourself the following pertinent questions: 

• What are their levels of security? 
• What is their track record in terms of breaches, hacks, and poor market conditions? 
• What was the financial impact in terms of assets lost or services withheld? 
• How did they deal with such issues, and what steps were taken to prevent a recurrence? 

Aside from security concerns, certain crypto exchanges are based in countries with strict regulations that can be problematic and limit exchange functions. Check the exchange’s home base and respective regulations to avoid becoming entangled in a web of unfavorable policies.

Binance, Kraken, Coinbase, and Crypto.com are the top picks in this category, but feel free to search out other reliable options.

Do Your Own Research (DYOR)

You don’t want to be in the dark about terms, know-how, principles, and processes when navigating the crypto space. Many crypto platforms provide educational resources to help you learn more about the industry. A good way to get started is to check out top crypto educational platforms like Binance Academy, Coinbase Learn, and Investopedia for beginner guides, trading tutorials, detailed glossaries, and the most recent crypto news, among many other materials. 

Before seeking financial advice from third parties, see to it that you have at least a basic understanding of blockchain, smart contracts, trading, staking, minting, and other relevant crypto processes, and that you are well informed about the potential projects.

Get Investment Advice From Reliable Sources

People invest in cryptocurrency for a variety of reasons, including the desire to diversify their portfolios, the fear of missing out (FOMO), and information obtained from others. The truth is that the cryptocurrency market is highly volatile, and no one really knows how to trade with a 100 percent success rate. Most people are simply doing their best, cutting their losses and limiting risk whenever and wherever possible. 

You have to understand the appropriate place to go for crypto advice and where not to go. It is best not to seek advice from unqualified family members, friends, random social media posts and pages, or strangers. Rather, hire a financial advisor who is an experienced expert who can help you create and manage an investment portfolio. Follow cryptocurrency experts and blockchain industry influencers to stay up to date on the latest developments and trends that may affect cryptocurrency prices.

Bottom Line

Security is a collective concern that must be dealt with collectively, with every involved party doing their part to make crypto investments safer. Before a truly safe crypto hub is achieved, it’s up to you to decide what level of care you want to exercise in securing your investments.

Disclaimer: This is not financial advice. This article was written solely for educational purposes only. The crypto market is still highly volatile so invest only what you can afford to lose and keep your sensitive information safe.