Are Traditional Crypto Security Practices As Safe As Originally Thought?
The new decade has brought with it a number of exciting developments, such as industry-wide gains and a host of new projects coming into the spotlight. However, there is one new piece of news that has managed to capture the attention of those heavily invested in the security of their assets. The well-known cryptocurrency exchange Kraken recently discovered that they were able to exploit a flaw in the Trezor wallet, allowing them to break into the hardware in just 15 minutes and gain access to funds (of course, certain features like passphrases did add additional security).
Considering the amount of trust placed into hardware wallets as well as into similar security practices, this type of development brings about a reasonable question, are our traditional security practices as safe as we originally thought? If someone can break into a physical wallet in such a small window of time and gain access to funds, what else could potentially affect the safety of cryptocurrency holdings? No matter how you choose to store your coins (and whether or not you are only holding for yourself or a company that handles large transactions), let’s take a look at the common security practices and the advantages and disadvantages of these methods.
Cold Storage: Paper Wallets and Hardware Wallets
The most commonly utilized security measures that are considered to offer further protection from hackers are paper wallets and hardware wallets. Both are said to be effective forms of cold storage (compared to hot storage, which consists of wallets that are always online), but they still come with their fair share of issues.
Paper wallets are obviously secure due to the fact that, as long as they are in your possession, you are the only one who is able to access the funds in the wallet. However, once you lose or find that someone else is in possession of your private keys, you no longer can access your wallet. In the event that they should be damaged, this could also lead to the complete loss of funds. Fortunately, as long as you have it stored away in a place where it will not be accessed by anyone else or damaged in an emergency, you will be able to preserve your funds.
On the other end of the spectrum, we have hardware wallets, which require you to insert a pin in your device to access your wallet, making it so that you are the only one who can access your funds. Unfortunately, as proven above, these devices may not be as foolproof as they were once considered. Additionally, like the above, a loss or theft of a device results in the loss of access to your funds. However, you may be able to recover your wallet with the phrase given to you upon opening your wallet (if you have stored it in a safe place as per request).
Although the above is relatively well-known information, it is important to regularly return to your security practices in case new developments occur and your current methods become a potential risk rather than a safeguard. Never put all of your crypto in one wallet, make sure to secure your information with passwords and 2FA, and keep any backup files or phrases stored in secure locations that only you are able to access. As long as you keep up with the latest security trends and updates, keeping your coins or the coins of others safe will be easier to accomplish.
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Published at Sat, 01 Feb 2020 17:06:44 +0000
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