Cryptocurrency Security Guide: Cybersecurity for Digital Assets - Defiway
Cryptocurrency and Cybersecurity: Best Practices for Asset Protection photo
By: Aly

Cryptocurrency and Cybersecurity: Best Practices for Asset Protection

Table of Contents

Crypto is typically considered an intriguing asset that gives a chance to start an investor career. As for today, you can find crypto projects for people with regular income as well as for those who decide to build their wealth with it. And they both need security systems to protect their assets from criminals.

So today, I want to raise the question: is crypto safe? How can people protect their wallets? Which factors do they need to consider while choosing crypto services? In this article, we’ll have a deep dive into cryptocurrency security standards.

Cryptocurrency and Cybersecurity: An Overview

Safety is a pressing issue of modern humanity. Particularly, when it comes to financial and personal data. And the crypto industry combines these two types of sensitive data.

So each party involved should stick to cryptocurrency safety guidelines. And you, as a final user, are fully responsible for your account and what happens with it. In the traditional finance industry, services use mandatory safety measures. These regulations force banks to bring money back if someone hacks your account due to non-secure bank applications.

In the crypto world, you are the only one responsible for your assets. If a service was hacked, and criminals stole money from your wallet you mostly didn’t get them back. So you need to keep an eye on the cryptosecurity measures of the chosen service.

Common Cybersecurity Threats in the Crypto World

The most common vulnerability while securing assets in crypto is the phishing attack, where users voluntarily share their service credentials with hackers. In traditional finances, it’s relatively easy to track criminals. But in a digital world, it’s almost impossible. That’s why it’s crucial to know how to protect cryptocurrency in the first place. Criminals use a network of unrelated anonymous wallets to withdraw stolen money.

Other common issues are malware and viruses: this software gives access to victims’ devices including typing info. I don’t recommend you visit suspicious sites that promise to fix your life within minutes. They usually scam-ish web portals full of malware. Social engineering is another common method to steal data. Those hackers are more tricky: they manipulate individuals through social engineering techniques, such as impersonating customer support representatives or friends.

Basic cryptosecurity rules work even here: you need to ensure that you are speaking with a trustworthy person and don’t follow suspicious links. Someone may hack a friend’s page and send suspicious messages to everyone in the contact list. Unfortunately, exchange hacks are still a case. Most often they happen on excessively profitable deals on regular exchanges. Excessive commercialism outshines people, so they voluntarily send money to the criminal’s wallet with the hopes to get more money than possible. And no measures from blockchain security companies could overbeat human greed.

Insider threats are pretty rare but still happen even in the 20s’. Those are activities conducted by individuals within an organization or platform with authorized access to sensitive information. The most infamous: the BitGrail 2017 case, the bizarre Poly Network hack in 2020, and the Harmony case in late 2021.

To mitigate these vulnerabilities, practice good crypto cybersecurity hygiene. It includes using strong and unique passwords, enabling two-factor authentication, using secure devices and wallets, and more. We will explore it in the next sections.

Real-Life Examples of Crypto Cybersecurity Incidents

I’ve already told you about some interesting incidents. Now it’s time to explore them in depth. The BitGrail hack was one of the first major insider attacks in the crypto world. Almost 6 years ago anonymous hackers stole over 17 million Nano tokens (almost $150 million). The hack was traced back to an insider with direct access to the main exchange’s hot wallet.

Poly Network is another infamous incident. Back in 2020, hackers with insider rights stole over $600 million worth of crypto from Poly Network. Those criminals exploit a critical vulnerability in the protocol’s code. Harmony hackers use the same scheme to steal $100+ million worth of crypto using a critical vulnerability.

The DAO attack of 2016 was another interesting case of failed cryptocurrency safety measures. The Decentralized Autonomous Organization was an Ethereum-based project aimed to operate as a decentralized venture capital fund. In June 2016, criminals found a vulnerability in the DAO's smart contract and siphoned off approximately one-third of the raised funds ( approximately $50 million).

To address the situation, the Ethereum community executed a hard fork, resulting in a split between Ethereum and Ethereum Classic. The hard fork effectively returned the stolen funds to the DAO token holders, but it also raised questions about the immutability of blockchains and the potential for contentious network splits in response to security incidents.

Even the biggest services running on the latest cryptocurrency security standards are not immune to the attack. In May 2019, Binance experienced a security breach. Hackers used a mix of phishing and malware to obtain users’ keys, two-factor authentication codes, and other information, enabling them to withdraw approximately 7,000 Bitcoins (worth around $40 million) from the exchange.

Binance quickly removed the breach, halted all withdrawals, and initiated an investigation. The exchange reimbursed affected users and implemented security enhancements, including hardware security keys for enhanced two-factor authentication and increased bug bounty rewards to incentivize vulnerability reporting.

Best Practices for Protecting Your Crypto Assets

As you can see, what may seem like the worst thing ever may turn out to be an event that makes the crypto a safer place. As for today, you have various safety measures on how to protect cryptocurrency assets. I’ve gathered them in the list:

  1. Unique and complex credentials. Get an email that you don’t share publicly. Create a strong password that you can easily remember, but ensure that is hard to guess. It can be the date when you broke up with the most annoying ex or the least favorite song.
  2. Launch the two-factor authentication. Add extra security levels, such as SMS or in-app code.
  3. Pick secure and trustworthy wallets. Cold (hardware) wallet isn’t connected to the internet. You can access the assets only when you connect that wallet to a computer with a stable internet connection. Ledger and Trezor are proven cold wallets. Hot wallets are usually part of the crypto service. You can access your wallet via any browser (even on TV or fridge) or on the official app of this service. As for mid-2023, you can safely try Coinbase, Defiway, and Exodus.
  4. Manage private keys safely. Hot wallets have access to the public and private keys of their users. You should choose only reputable services with secure sign-in options.
  5. Keep your software up-to-date. Hackers worship vulnerabilities. It allows them to break the crypto cybersecurity measures of any wallet. Old software has thousands of possible break points. That’s why your choice is to keep up with the updates.
  6. Practice internet hygiene. Don’t visit suspicious sites or open emails from unknown addresses. Refuse to download unknown files.
  7. Use VPN when you enter public Wi-Fi. Hackers with physical access to the same public network as you can easily hack you. The easiest way to prevent it is by using a VPN that will act as an invisible wall between you and criminals.
  8. Have multiple wallets, if it’s possible. Don’t put all eggs into a single basket. That is how you can be sure funds will be safe even if some service gets hacked.
  9. Stay Informed. Stay updated on the latest security practices and news. Follow reputable sources and join relevant forums or communities to stay informed about potential threats and best practices for securing your crypto assets.

Remember, cryptocurrency safety requires a proactive approach. By following these practices, you can enhance holdings security and reduce risks to get scammed.

The Role of Cybersecurity Companies in Protecting Crypto Assets

Accountable businesses are the driving force of innovations. They are responsible for creating tailored and secure solutions for businesses and private users. Cybersecurity companies can create new technologies that serve as a basis for cryptocurrency security standards.

They can create new types of wallets and educate users on how to pick the type that suits their situation. Those companies can create user-friendly advanced security measures. Later, crypto businesses can implement these techniques in their tools.

Cybersecurity companies often have white hackers for penetration testing. These technicians can simulate real-world attacks, which helps to uncover weaknesses in different companies’ tools.

They can conduct security audits to assess the compliance of various crypto platforms for regulatory requirements. Compliance with frameworks like ISO 27001 or SOC 2 is the cryptocurrency security standard that can enhance trust among users and investors.

Cybersecurity firms can provide training programs and workshops to educate cryptocurrency users, developers, and organizations about best security practices. These programs raise awareness about common threats, social engineering techniques, safe browsing habits, and secure coding practices. Cybersecurity companies can offer continuous monitoring services to detect and respond to potential threats in real time. This proactive approach helps in early threat detection and prompt mitigation.

In short, blockchain security companies are a crucial part of the tech landscape. Their expertise and tailored solutions help crypto companies and individual users stay ahead of evolving threats and protect their assets.

The Future of Cybersecurity in Cryptocurrency

Crypto companies won’t survive without cybersecurity experts. The future of cybersecurity in blockchain looks highly promising. None of the blockchain companies will pull through without the security management. People will be afraid to use tools that don’t implement the latest security measures. Businesses will be obligated to use enhanced security measures to combat constantly evolving threats. Ongoing research and innovation hold promise for stronger security in the future.

We also will see the importance of cybersecurity education among users. Tech experts can build the best tools but they don’t hold any power when users refuse to implement them. So, blockchain companies will need to educate their customers about cryptosecurity measures just like I do for you right now. We will see the emergence of quantum computing. They have the potential to break common cryptographic algorithms, such as RSA and Elliptic Curve Cryptography (ECC).

But what about governments and regulations? Governments and regulatory bodies recognize the need to address cybersecurity concerns in the cryptocurrency space. We can expect the development of more potent regulatory frameworks that outline security standards, data protection requirements, and incident response protocols.

Bottom Line

Is crypto safe? With modern security measures, it is! Blockchain and cybersecurity are tied. The decentralized and digital crypto nature presents unique security challenges that require attention and proactive measures. Hackers will always attempt to break crypto accounts more than bank accounts simply due to the anonymity of the crypto withdrawal process.

The main task of cybersecurity experts and you as the user is to prevent unauthorized access. There are various ways how criminals can get access to your passwords and private blockchain keys. You need to adhere to digital hygiene to keep away from their ties. The future of cryptosecurity in the crypto world looks promising. The only ones who will survive in the next 5-10 years are the businesses with advanced security measures. Users will place their assets in their wallets, run exchanges, and employ investment tools. Less secure alternatives will mostly fail.

Look for services that can give you multiple services in one app so you don’t need to jump from one app to another risking corrupting your personal information. Defiway provides you with a secure crypto wallet where you can store multiple cryptocurrencies simultaneously. We also have a built-in exchange, eliminating the possibility of falling into hacker exchange traps. Payroll service allows you to send freelance commissions and employee payrolls straight from your crypto wallet. Invite your coworkers and set up a custom algorithm to automate payouts. It also eliminates the need for third-party services that may corrupt your data. Want to find out more helpful info about crypto and its safety? Stay tuned and subscribe to Defiway socials!