Home Artificial Intelligence Cryptocurrency: Learning from Professionals’ Mistakes

Cryptocurrency: Learning from Professionals’ Mistakes

CRYPTOCURRENCY: Learning from Professionals’ Mistakes

In the last few weeks, we’ve seen an uptick in scam or “wallet draining” activity. Wallet draining is when a phisher or scammer gets access to your wallet and proceeds to rapidly transfer out all of the assets (cryptocurrency tokens and NFTs). These events are not just happening to retail users and those newer to crypto, they’ve been happening to influencers confident enough to call themselves on Twitter “NFT God,” and COO’s like Nike/RTFKT’s Nikhil Gopalani.

The common thread between these two events is that the victims had their wallets drained due to wallet hygiene missteps that many can relate to. What they did right was share their stories, in detail, with their communities, which has caused a resurgence of interest in setting up previously dust-accumulating hardware wallets. 
While it’s impossible to guarantee 100 percent security, there are several steps you can take to ensure that your wallet is secure. It’s important to regularly discuss the importance of wallet best practices, as well as how to protect yourself from becoming a victim of a wallet draining scam. 

Crypto wallet hygiene is essential for anyone storing (or looking to store) cryptocurrency or NFTs in digital wallets. It’s important to remember that your wallet is only as secure as the practices you use when managing it. Here are some tips for keeping your wallet safe: 

1. Use strong passwords and enable two-factor authentication (2FA) on all of your regular (non-crypto) accounts like email addresses, cellular plans, etc. Strong passwords should include at least 12 characters with a mix of upper and lower case letters, numbers and symbols. Adding 2FA to these accounts adds an extra layer of security by requiring you to enter a code sent via text message or email before being able to access your account. 

2. Private keys should always be written with pen and paper (or other non-electronic methods such as steel), iPhones and laptops can automatically read the text of a photo or screenshot, which compromises your private key. This is one of blockchain’s biggest barriers for mass adoption today, and unique and creative solutions are being developed (think email wallets and wallets that require more than one signatory for a transaction). 

3. Never share your private keys with anyone, even if they claim they need them for legitimate purposes such as verifying ownership of an asset or transferring funds between wallets. Your private key should remain confidential at all times!  

4. Store your cryptocurrency in cold storage wallets whenever possible instead of leaving them on exchanges or other online services. When not in cold storage, they could be vulnerable to hacks or theft by scammers who have gained access through other means such as phishing scams or malware attacks. Cold storage wallets are offline devices that provide an additional layer of security by keeping funds away from potential attackers who may try to gain access through online services like exchanges or web wallets. 

6. Back up your back-ups. Layered protection keeps you secure even if your assets are compromised. Additional layers of protection for your wallets include firewalls, two-factor authentication (2FA), and securely wrapped tokens. 

Lastly, always keep backups of all important data related to your crypto assets such as private keys, seed phrases, recovery phrases, etc., so that you can recover them in case something happens to them (e.g., lost device). 

By following these steps you can help protect yourself from becoming a victim of a wallet draining scam and ensure that your crypto assets remain safe and secure in the long run.