Wherever you hold cryptocurrency there is a risk of it being stolen.
Cryptocurrency theft is becoming more common because hackers have found it easier to steal than cash or electronic money in the banking system.
Cryptocurrency is a target for criminals because it is often stored in large amounts and can be transferred immediately and anonymously from anywhere with only a private key or passcode.
Broadly the risks fall in to the following categories:
1. Password or private key theft – this can happen in many ways, stealing or hacking into your device, obtaining the paper key, compromising your email account or through malicious software.
2. Spoofs and scams - you are tricked into transferring funds to the wrong address by a thief pretending to be a legitimate recipient or site.
3. Exchange hacks – exchanges are major targets for hackers as they often have custody of $ millions in cryptocurrency. Over $1 billion has been stolen in 2019 alone.
4. Exit scams – an exchange or custodial service you are using steals your funds.
5. Criminal extortion - you are forced by violence or threat of violence to grant access to or transfer your funds against your will.
Cryptocurrency users face multiple types of attack
A number of different types of attack have made the news in recent months demonstrating the range of risks cryptocurrency holders face:
Cyber attack - British journalist Monty Munford lost £25,000 of Ethereum when his private key was stolen when his Gmail account was compromised: Link
Device hack – corporates are vulnerable too. In October 2019 Algo Capital lost $ 2million dollars in USDT and ALGO tokens after its CTO’s phone was breached: Link
Malware– In September, a remote access trojan able to steal sensitive information stored on a device targeting bitcoin and cryptocurrency wallet data was identified: Link
Exchange hacks - Hackers attacked one of the largest cryptocurrency exchanges in May and withdrew 7,000 bitcoins (BTC) worth over $40M at the time of the theft: Link
Exit scams - $2.9 billion in deposits were lost in an alleged scam at wallet provider and exchange PlusToken in August: Link
How to Minimise the Risks
Whether you hold your funds on an exchange or in your own wallet, your main worry should be to protect yourself against password or private key theft. If someone else gets access to your wallet or exchange account they can steal your funds.
To help you stay as safe as you can we have id some essential steps for keeping private key or password secure and inaccessible to any body who may wish to exploit it.
- Tighten up your email security and only open emails from trusted sources
- Keep your devices clean and install a reputable antivirus program
- Use two-factor authentication wherever possible
- Be wary of public wifi when accessing the internet away from home
- Don’t store the key using any of the following email, note-taking app, cloud storage or in a file on your computer.
For more details on how to keep your wallet more secure visit our blog post on how to make your digital wallet more secure, here!
But however cautious you are, your cryptocurrency remains at risk. Theft Cover from Coincover addresses this risk head on. If the worst does happen, you can be assured we will help turn a bad situation into a better one. Our premiums start from as little as 1% per year with cover levels to suit all needs. We accept payment in Bitcoin, Ethereum and Fiat currencies.
Visit https://www.coincover.com/theft-cover to learn more.
Up Next: Part 2 What is cryptocurrency insurance? An introduction to theft protection for digital currencies.