Crypto security can be a pain, but a few backups will do a lot

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Invest in cryptocurrency? Lock your wallets.

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Securing your cryptocurrency can seem like a daunting task. For the uninitiated, the learning curve includes hot and cold wallets, online exchanges, and private keys.

Digital security experts warn that you shouldn’t skimp on your studies, especially the hardware and software wallets used to store data proving ownership of cryptocurrencies. Unlike a stolen credit card number, which can be an annoying but surmountable problem, stolen cryptocurrency is often simply lost due to the decentralized nature of many digital coins.

If you’re having trouble, you might not have someone to turn to.

Hackers are drawn to cryptocurrency because it can be stolen from the internet, which means that victims are often far away in different countries. Even if identified, hackers can be in countries – think Russia – that make extradition difficult, so the threat of punishment is low. And cryptocurrency is difficult, but not impossible, to trace.

Cryptocurrency comes with security risks that other types of investments don’t, says Don Pezet, co-founder of online computer training company ITProTV.

“If a hacker steals your funds, they’re just gone,” said Pezet, a longtime IT professional who is also the chief technology officer of ITProTV’s parent company, ACI Learning.

The best thing you can do, he says, is make sure your cryptocurrency is secure from the start, so you don’t run into any issues down the road.

Crypto exchanges, where investors can buy and trade one currency for another, are under constant threat from cybercriminals looking to make big gains by emptying the vaults.

One of the biggest thefts of all time occurred in August, when cybercriminals exploited a vulnerability in Poly Network, a platform that connects different blockchains, the online software ledgers that record the transactions of cryptocurrency. Once inside, the hackers ransacked Poly for $ 600 million, although the funds were later recovered.

Read more: What to do if your bitcoin, ether, or other cryptocurrency is stolen

Not all hacks make the headlines. Cybercriminals also seek to steal the wallets of individual investors, and they use many of the same methods used to break into any other online account. You risk being looted if you give up your credentials in a phishing scam or if you let your devices get infected with malware.

While people fear being targeted by attackers, they themselves may actually be the biggest security threat to their cryptocurrency, said Andrew Gunn, senior threat intelligence analyst at ZeroFox.

“We can’t afford to forget the human element,” Gunn says.

Here are some expert tips on how to protect your digital assets.

How to protect your cryptocurrency

Use a “cold” wallet for long term storage. Cold wallets store data proving cryptocurrency ownership offline, making it much harder for cybercriminals to reach. Both Pezet and Gunn claim that cold wallets are the safest option available.

The private keys of your cold wallet can be stored on a device, such as a USB stick. You can also print them out on paper and file them. Either way, an attacker cannot access your cryptocurrency without them.

The downside to this method of storage is that you are solely responsible for securing it. If you lose the USB drive or misplace your file, you cannot get your cryptocurrency.

“There is a ridiculous amount of unclaimed crypto in these types of situations,” Gunn said, adding that some people have looked for password hackers to break into their accounts after forgetting their credentials.

Cold wallets are also not as convenient as hot wallets, which are hosted online, often by a cryptocurrency exchange. It’s fine to keep some of your funds in a warm wallet if you’re using the cryptocurrency for your daily spending, Gunn says. But he urges everyone to properly secure these accounts to make them more difficult to decipher.

It also makes sense to keep as little cryptocurrency as possible in hot wallets. If your funds are stolen, there isn’t much you can do to get them back.

Gunn advises using multiple cold and hot wallets, each protected by its own unique password. That way, if the worst happens, you limit the fallout.

Use strong passwords and multi-factor authentication. Securing your cryptocurrency with good passwords is absolutely mandatory, as it is with all digital accounts. We are talking about at least 12 random characters.

Two-factor authentication, which requires a second form of identification such as a fingerprint or push notification on your smartphone, also helps secure accounts. It will greatly help your security if your password is compromised.

Only use your own device to access your wallets. It might sound convenient, but don’t access your cryptocurrency from a public computer, like the one in a library or hotel business center. There is no way to know if they are infected with malware.

Likewise, be sure to take care of your devices. Keep your antivirus software and operating systems up to date. Always use a secure internet connection, preferably backed up by a VPN, Gunn says.

Do your homework. Larger and more regulated exchanges are generally more secure. Make sure the one you use is reputable, especially if you are going to be using it for a hot wallet.

Beware of emails that appear to be from the company that owns your cryptocurrency wallet. It could be a phishing email seeking to steal your credentials and ultimately your funds.

As with emails that appear to be from your bank, it’s always best to ignore the included hyperlinks and go directly to the company’s website.

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