In view of the rising number of frauds in crypto space, it has become important for investors to have a good wallet. Selecting a good wallet may, however, be tricky.
Wallet-stealing malware has been around for many years. Like other criminal enterprises, criminals go where the money is. Whenever there’s a rise in crypto popularity and prices, you can expect an increase in related attacks.
Crypto wallets come in two forms – Hot wallet and Cold wallet.
Experts say that selecting a crypto wallet is similar to selecting any piece of technology or service that can have significant impact on investors’ life.
While reputation of the vendor or source is key, very few individuals will be able to objectively assess the security of a crypto wallet’s reputation, which is why the reputation of its source is important.
“Many users will opt to use a well-respected crypto exchange, where all funds are stored on your behalf, similar to a bank or online brokerage firm. Crypto wallets can also exist where all information is directly stored by the user, either online or on physical media such as a USB stick or hard drive. In this latter scenario, the user must safeguard the keys or risk having the information stolen. There is no recourse if they are lost or stolen,” Steve Grobman, SVP and Chief Technology Officer, McAfee, told FE Online.
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Broadly, there are two general implementations of the underlying wallets:
Grobman said that the hot wallets store cryptocurrency on the internet and are often accessible via smartphone, computer, and tablet.
“The online nature of a hot wallet makes the funds immediately available, but also makes the funds more susceptible to theft,” he said.
These wallets store cryptocurrency in places not connected to the internet, which can include a hard drive, USB stick, or paper wallet (keys printed on paper).
“The offline nature of a cold wallet helps guard against a cyber-attack but is at the expense of convenience and immediate availability of funds,” said Grobman.
Crypto frauds could be in the form of phishing attacks, malicious downloads, and email scams.
“Practicing good digital hygiene is a powerful defense. Consumers should be suspicious of unsolicited instructions and requests for actions and always navigate directly to trusted sources rather than clicking links in emails, texts, or social media,” said Grobman.
He further said that password hygiene is also critical. “Use a unique password for every application and site. Be sure to not include information in the password that is publicly obtainable such as birthdays or anniversaries.”
(Crypto and other virtual digital assets are unregulated in India. Please consult your financial advisor before investing in crypto)