The crypto market is rated as one of the least secure investments and it should come as no shock that you need to take extra precautions to secure your assets. Since 2020, annual estimates of illicit activities recorded by Chanalysis have increased progressively by 25%. In 2023, crime reports accumulated to over $24.2 billion, and in 2024, this number skyrocketed to $46.1 billion.
Much of these increases are attributed to the growing number of illicit players in the space. However, at the same time, the crypto market recorded some of the biggest gains in 2024, especially with Bitcoin reaching its highest at $108,786. The bottom line is that the risks involved shouldn’t stop you from trading the markets and positioning yourself for their potential gains. Instead, learn how to protect yourself against these illicit actors. This article will teach you exactly how.
Choosing a Secure Trading Platform
Several events in the market have shown how much your choice of trading platform can affect your journey. Some investors who lost money to the FTX scam haven’t recovered to date after a total of $8 billion in assets went missing. Platform safety and security should be a priority, and you definitely want to ensure the trading platform is legit and has strong security measures in place. Let’s look at some key features to look out for in your trading platform:
- KYC and AML measures: Know your customers (KYC) and anti-money laundering (AML) are key features in crypto trading platforms. KYC is a regulatory requirement used to confirm the identity of customers and also protect them from illicit players. AML is also used to protect against such activities. It is about the laws and regulations in place to prevent criminals from obtaining money illegally on the platform.
- License and regulatory compliance: Crypto trading platforms go through some form of regulation before they are licensed to operate. The Securities and Exchange Commission is in charge of this process in the United States, so you can easily check to be sure this body authorizes your chosen platform.
- Security measures: Every year, criminal accounts find new ways to exploit crypto market investors, so your platform of choice should offer advanced protection and security measures. Some features to look out for in this regard are SSL website encryptions and multifactor authentication.
- Reputation: Does your chosen trading platform have a good reputation amongst users? Is it highly recommended by other retail traders like you? If you have a positive answer to these questions, then you’re good to go.
Securing Your Crypto Assets
There is so much to look out for as a crypto user, with some of the most common threats being phishing attacks, ransomware, crypto-jacking, and fake wallet scams. Let’s discuss some easy ways to guard against these threats, regardless of which form they come in.
Complex Password and Multifactor Authentication
Strong and unique passwords are one of the most basic ways to secure your assets. You can use a password manager to generate a strong, complex password. Ideally, your passwords should have at least 16 characters, with a mixture of uppercase and lowercase letters, numbers, and symbols. A password manager is not only useful for creating one, but can also be helpful for remembering your passkey. In addition to the passcode, you should also use two-factor authentication (2FA) whenever you can. With 2FA, you add an extra layer of security other than your password.
Constant Software Updates
Most crypto platforms include new security patches in their updates. These are features that protect against the latest discovered threats in the market. When you keep your software updated constantly, you benefit from these new updates.
Virtual Private Networks (VPN)
Most traders use a VPN for extra security because it helps encrypt their internet traffic and also masks their IP address. This makes it difficult for anyone to track, intercept, or access their transactions. VPNs offer extra privacy that can protect you from potential hacks and theft. They can also be used to carry out transactions securely from any location.
Consider Multi-signature Wallets
A multi-signature wallet, also called a shared or multi-sig wallet, is one that only allows users to confirm transactions using multiple signatures. It is considered a more secure alternative compared to single-signature options, which only require one signature to confirm a transaction. Consider using a multi-sig wallet for an extra layer of protection.
Back-Up Your Wallet
This tip is particularly helpful when you lose your device or it gets stolen or damaged. In such a scenario, backing up your wallet makes it easier to recover your funds. A common option here is a seed phrase. Most wallets provide a seed phrase that can help you recover your funds after losing a device. Have your seed phrase safely stored in case of such emergencies.
Adopting Best Security Practices in Crypto Trading
The security measures highlighted in this article can help you improve your security when trading the markets. But it is essential to be vigilant and extra careful in all your interactions. Don’t fall for obvious tricks like opening random web addresses shared in the crypto space, scammers posing as customer support services, and phishing attempts, amongst many others.
Founder Dinis Guarda
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