Greater success comes with greater risks. This statement is especially true for the cryptocurrency scene.
More and more money has been put into crypto wallets. From mom-and-pop investors to governments, cryptocurrency has enjoyed unprecedented popularity in recent years. At its peak, the market value of this market tops $2 trillion. As of March 2022, more than 21% of adults polled by CNBC have been involved in it at some point.
This amount of wealth becomes a natural target for hackers. Breach after breach happens, while countless crypto holders lose access to their wallets on a daily basis. Read on to understand the pitfalls of crypto wallets and why password managers can tackle those issues.
Difficulties With Securing Crypto Wallets
They Need Several Credentials To Function
Lone hackers and state-backed actors both aim at the same things: keys and passwords.
The term wallet can be confusing and even a misnomer. In reality, it doesn’t hold any real coins like your physical wallet. What it stores are your pair of keys – things that make asymmetric cryptography work.
When you create a wallet, the provider gives you a public key. You can share it, which acts like the address of your wallet. There is also a private key. You will need it to access the wallet or authorize transactions.
Most wallets have a seed phrase, which is a mnemonic of random words. It forms a more readable representation of your private key. And as a result, this phrase can come in handy when you need to recover your wallet.
(This seed phrase isn’t supposed to be learned by heart, however. They consist of 12 to 24 words that don’t make sense as a sentence. You need to keep it somewhere safe.)
These crypto keys are required to help you interact with the blockchain network. Without them, it couldn’t verify whether you are the real owner of certain coins (which are all stored on the blockchain).
Losing access to these keys also means you lose your crypto assets forever. For some people, this problem can cost up to $220 million.
It Is Your Job To Store Those Credentials Safely
Blockchain is an amazing technology with more applications on the horizon. But at the end of the day, it is still a new invention many may find it hard to get used to.
The decentralized nature of cryptocurrency requires more responsibility from users. The burden of taking care of private keys falls on them. And storing them in a secure way is non-trivia.
Most people choose hot wallets to store their keys. Available as web, desktop, or mobile apps, they are all connected to the internet. Those apps encrypt and store private keys. By making these keys online, hot wallets make access and transactions of crypto more convenient. But this also puts them at greater exposure to vulnerability.
In stark contrast, cold wallets cut away the connection between your wallet and the internet. They exist in any form of physical medium you can think of (like paper or USB keys). You write down or save your keys to them and keep these items in a safe location. The physical insulation protects you from any kind of online attacks.
That said, cold storage has extreme downsides too. Making a transaction with it is bothersome. You will need to read and type in your keys or insert a device into your computer. Superior security doesn’t make sure your keys are intact either. You can lose your paper or USB stick. And without a backup, it becomes a disaster.
Most investors these days select an exchange to strike a balance between security and convenience. When opening an account in these centralized platforms, users don’t actually hold private keys. Your cryptocurrency stays in a custodial wallet, whose credentials are in the control of the exchange.
Most of these assets get split between hot and cold storage. The exchange can send or receive coins on your behalf, and you just need to log in to make the transaction. Still, these services require authentication in a traditional way.
Overall, you can’t escape this trouble. Be it a private key, a seed phrase, or a password; you must keep hold of something. Failure to do so can mean the loss of control over your crypto assets forever.
Improve The Security Of Your Wallets With Password Managers
Password managers came before the era of blockchain and cryptocurrency. But as far as credentials are concerned, they are still a critical tool. Many common features in password managers can help you secure your crypto wallets in one way or another.
Humans are bad at remembering long and random strings. Trying to memorize and recall your keys and passwords is a suicide mission.
Instead, why don’t you put them in the vault of a trusted password manager? You can save a whopping number of credentials there, including every detail of your account.
No matter how many accounts and wallets you own, all you need to remember now is a single master password. It is the key to every other key, allowing you to manage all your credentials. Without this password, no one else can peek at or steal your accounts.
All crypto exchanges recommend 2-Factor Authentication (2FA) as another layer of protection for your wallets. Even when a hacker somehow has your password, they can’t break into your account and take away your coins.
Not every 2FA option has the same level of security, however. SMS-based codes are popular and easy to use, but techniques like SIM swapping can render them useless.
Full-fledged password managers come with Time-based one-time passwords (TOTPs). It provides a stronger verification method that isn’t tied to your phone number.
Biometric authentication with fingerprint or face recognition is another popular feature. It puts another enormous challenge hackers must overcome to have their fingers on your crypto assets.
Why Locker Is The Password Manager You Can Trust
The developers of Locker have created a solid solution that crypto owners can use right away to protect their assets.
This software features a modern interface, making even the most advanced security function a breeze to use. You can save pretty much any secret there, whether it is a password, note, or credit card.
Locker gives prominence to crypto wallets, which have a storage category of their own. The custom form makes it easier to store every aspect of a wallet, which Locker encrypts along with the rest of your vault. Thanks to the industry-standard encryption algorithms, no one should be able to access them except for you.
You can import a secret key or scan the provided QR code into Locker, which will create a unique TOTP every 30 seconds. This single-use code can be used to verify with your exchange. The short time frame during which the TOTP is valid makes it extremely harder for attackers to compromise your account.
When logging in to an account or making a transaction, copying the key or password doesn’t take more than a few taps or clicks. If you enable the form-filling function, Locker can even suggest which information to use right away.
Crypto assets are under bigger threat when they grow. Your investments can vanish into the void if you can’t provide the security they deserve.
Locker can help you with this. It takes the hassle out of crypto asset management without jeopardizing the security. Download Locker and register an account now to secure your crypto wallets from today.