Every crypto wallet should have protection that is greater than an easily cracked username and password.
Anyone who follows any cryptocurrency news, traders or projects on social media would have come across a scammer or two, posing as someone else to try and fool investors into parting with their digital assets.
While the scammer’s accounts are normally quite easy to spot, new crypto investors regularly fall victim to their schemes. Posing as an experienced trader, or member of a crypto project, the scammer will normally ask users to send them cryptocurrency, promising to return the investment many fold, but the investment is never returned.
Unfortunately, you do not have to fall victim of a scam for you to be at risk of your wallet being emptied.
Exchanges, such as Binance, are fantastic for buying, selling and trading cryptocurrencies, but they offer very little resistance against unwanted access to your crypto wallet. This is because account email addresses, usernames and passwords are easy for hackers to crack, and there have been many instances of crypto holders losing their entire balances to online intruders.
Cold storage devices are physical drives, such as a USB stick, which prevent unauthorised access to your funds, by only making them available when the device is connected to a computer and unlocked with a passcode. While, a cold storage device is highly recommended for long-term traders, who do not need to regularly access their funds, it can be a bit of a pain for someone who wishes to access their accounts on the go, or someone who regularly liquidates parts of their portfolio.
Sending cryptocurrency between exchanges and cold storage devices also incurs network fees, so if you are not holding a large sum of crypto, or if you are only holding short term, it may not always be worth moving it to a cold wallet.
So how do you keep your exchange wallets secure?
The best way to protect your crypto wallet from unauthorised access is with 2 Factor Authorisation (2FA), also known as 2-Step Verification.
Two-Factor Authentication works by adding an additional layer of security to your online accounts. It requires an additional login credential – beyond just the username and password – to gain account access, and getting that second credential requires access to a digital device that belongs to you.
The most commonly used 2FA protection is an app called Google Authenticator, downloadable from Apple’s App Store and Android Play.
Upon downloading the Authenticator app and linking it to whichever account you would like to protect, a randomly generated six digit code will then be displayed in the app, changing at 60 second intervals. The code is then required to log in to the exchange, or withdraw cryptocurrencies from the wallet.
In summary, with 2FA enabled, account access and withdrawals are completely restricted, unless you have access to the linked device. The most secure way to store your cryptocurrency is with a cold storage device, but if you keep any currency on exchanges, make sure it is protected by more than just a password – enable 2FA for maximum security.
Before you set up 2FA protection, be sure to make note of your seed phrase or recovery key from the exchange account, in case you misplace the device with the 2FA application installed. If you lose access to your 2FA application, you will need to verify your identity with the exchange to regain access to your account.