Your crypto wallet can be hacked. It doesn’t matter what the Bitcoin price in USD is and how much of it you have; if someone wants to take it, they will find a way. And, yes, people love to argue about how there’s no middleman and it’s a decentralized and safe currency, but if someone does take your money, there’s no one to protect you. Crypto exchanges and wallets won’t necessarily give it back like traditional banks will.
Recently, the supposedly North Korean claimed hack on ByBit has already successfully converted over $300 million of their $1.5 billion heist into funds that aren’t recoverable. That proves no crypto wallet or exchange is safe.
Yes, it might be trickier to hack a crypto wallet, but read on for tips on how to stop yours from being hacked.
How to Keep a Crypto Wallet Safe
You need a multi-layered strategy.
A hardware wallet is the best. Unlike software wallets, which keep your private keys away from the internet, hardware wallets keep them offline, making remote hacking near impossible. Ledger and Trezor are the main brands.
Following that, two-factor verification authentication (2FA) is essential. Most crypto wallet apps force you to set it up. If possible, always use an auth app like Google Authenticator or Authy instead of SMS-based 2FA. There’s no denying that SIM-swapping assaults do happen, and hackers can gain access to your phone number a lot faster than one can imagine.
Also, keeping your seed phrase secure is important. This 12- to 24-word phrase is the actual key to unlocking your crypto fortune. It is a good idea to put it down, but on paper, not on a phone or computer.
Updating your software is also essential. Keep your wallet software, operating system, and any associated security programs up to date, as hackers always look to exploit misinformation in outdated computer software.
How Hackers Get Into Crypto Wallets
It’s no secret that hackers are relentless.
Phishing scams often trick users by crafting fake websites that are duplicates of authentic ones. Emails, social media, and even far too innocuous-looking Google ads can lead to scammers conceiving detailed sites that can capture users’ sensitive information.
Malware has become shockingly commonplace lately. Keyloggers use software aimed at recording individuals’ passwords and seed phrases. Other copycat malware can also record every mouse movement, take screenshots, or even capture and store clipboard data. After that, credentials are a breeze to steal.
Then there is SIM swapping. This attack can be particularly damaging for victims who use SMS 2FA. A hacker tricks the mobile carrier into transferring a victim’s phone number to a new SIM card, allowing them to access the victim’s messages. This includes any sensitive texts, like authentication codes.
Mid-network attacks also happen. If a victim connects to public Wi-Fi, a hacker can capture any information sent over the network, which includes sensitive wallet information.
And of course, social engineering. Posing as support personnel or fellow investors makes it easy for hackers to trick ignorant victims into revealing their information.
How Safe Are Crypto Wallets and Exchanges?
The Bybit hack is not a singular case. Well-known exchanges were all hacked at some point, losing billions of dollars of assets.
With an exchange, even if they claim to have top-of-the-line security because it is a centralized exchange, it will always be a target for hackers.
Hot wallets, or those connected to the internet, are easily hacked. As experienced traders know, hacking these wallets is easier than hacking cold wallets for storage, so the amount stored in hot wallets is kept minimal and meant for daily use. The rest of the amount is stored in cold wallets with increased protection.
Both centralized and decentralized exchanges (DEXs) carry distinct risks. DEXs are, however, more susceptible to hacking because of smart contracts. There’s little to no regulation on these types of contracts. Funds can be gathered quicker, easier, and without warning.
They all come with risks and bear the possibility of being used against them. Still, if you look at the statistics, these exchanges are still far safer than traditional financial systems.
What You Should Do If Your Wallet Is Hacked
The first thing you should do is check your account. If you still have access to the wallet, set the funds aside and secure them immediately. If not, call for support.
Informing the exchange or wallet provider should be your next step, but expect it to be a tricky and long process. Unless it was a widespread attack that gained media attention like the ByBit one, it’s unlikely you’ll have the issue resolved quickly. While there is no guarantee of recovering the funds, they can freeze the account to minimize damage and reduce further loss.
After that, there’s nothing you can do. You can focus on improving your security measures. Find a hardware wallet, change your passwords, enable two-factor authentication with an authenticator app, and most importantly, do not use the same password across different sites and apps.
Crypto is an innovative approach to a financial system, but it isn’t hack-free. Hacking attempts will likely become more common as crypto expands. And, despite all this, crypto wallets and exchanges are still so safe!
