Technical reasons for the loss of cryptocurrency. Features, security measures, countermeasures, current recommendations
Many thousands of users today want to own a cryptocurrency, use it in financial transactions or make money on digital coins. As a result, a part of such an audience completely lose their own savings for various reasons.
What is the reason for the loss of currently demanded coins? After all, everyone claims that cryptocurrency is decentralized, safe and anonymous, and making money on it is extremely easy. There are many real reasons for this problem, and most of them are due to the illiterate or frivolous actions of the coin holders themselves or crypto wallet owners. However, there is another category of factors – these are technical reasons for the loss of cryptocurrency.
We will analyze in detail the most relevant moments, which often create unpleasant surprises in the form of the loss of cryptocurrency. Such reasons are not directly related to the owners of bitcoins or altcoins.
Factor # 1. Losses from hacking a cryptocurrency resource
Hackers’ attacks on all sorts of places of accumulation of virtual currency are steadily increasing – these are crypto-exchanges, storages, cloud mining pools, user accounts, etc. intruders. Of course, the degree of protection of such places proportionally reduces the risk of a successful cyberattack, but there is always the possibility of hacking absolutely any system.
Countermeasures are as follows:
- It is reasonable to use online cryptocurrency wallets and not accumulate large amounts of digital money on their accounts;
- Keep the main capital on desktop wallets, for example, Electrum for Bitcoin. It is better to entrust large savings to paper and hardware versions of crypto-storages, such as Ledger, Trezor, etc. These are the highest quality and most reliable options for saving money today.
- In principle, avoid concentrating large accumulations in a single place. It is recommended to split the available coins into different wallets.
- Be sure to create strong passwords and ensure their highly secure storage. It is also necessary to use public and private keys extremely carefully.
Important! You cannot put identical passwords on all cryptocurrency wallets and exchange accounts. This eliminates the feasibility of creating many places for storing digital coins, since the thief will be able to reset all accounts, having learned the codes in one place!
Factor # 2. Ignoring two-factor authentication
Two-factor confirmation (2FA) of identity provides an additional level of protection, in addition to the classic password and login. The security system will additionally send secondary codes to email or a mobile phone number in order to unambiguously confirm the identity of a user trying to enter a cryptocurrency vault or perform a financial transaction.
Users are often too lazy to activate two-factor authentication, and often use resources where it is not provided at all. This is a rash, illiterate decision. It is extremely difficult for hackers to crack a heterogeneous two-stage protection, rather than just getting a password with a login and electronic keys.
The solutions here are:
- Do not use the services without the ability to enable additional account protection.
- Always enable 2FA.
- Set extremely complex passwords everywhere and save them securely, writing them down in several places (preferably in notebooks or books).
Loss factor # 3. Viruses, Trojans and Spyware
Now all over the World Wide Web scammers are spreading special software that automatically intercepts and collects all user input. These are passwords, keys, logins, seed-phrases, etc. It is easy to “pick up” such programs on unreliable sites, clicking on dubious links, as well as when downloading and installing pirated software. That is, distribution is carried out in the same way as classic viruses that harm your computer.
The protective measures are as follows:
- Install a firewall and provide licensed anti-virus protection.
- It is preferable to install crypto wallets on an OS that attracts hackers much less – this is Solaris, Mac, Unix or Linux.
- Avoid installing any programs of dubious origin related to cryptocurrency and blockchain technologies.
Factor # 4. Storing digital coins on cryptocurrency exchanges
This reason is incredibly important. Many cryptocurrency traders are in the habit of accumulating earned bitcoin, ethereum, ripple and other coins on their trading accounts, as they try to avoid paying commissions from supposedly unnecessary withdrawal / deposit of funds. Such frugality is extremely fraught with the complete zeroing of the account (exchange cryptocurrency wallet).
This error is caused by two main points:
- Cryptocurrency exchanges are very often “exposed” by hackers, stealing funds from crypto traders. Such incidents are periodically advertised, but most of the successful thefts are secretly hushed up by the owners of trading floors.
- There is a risk that the crypto exchange will be closed instantly. Even if the protection against hackers is super-quality and incredibly modern, there is no guarantee regarding the integrity of its owners, managers or system administrators. There were similar situations when crypto exchanges quickly changed their name and management, announcing themselves as a completely new service that did not owe anything to their previous users. The capital of traders on the accounts is huge, so the temptation to steal them is great.
Attention! It is recommended to trust cryptocurrency exchanges with a small amount of digital coins. When funds are stolen by hackers or when a trading platform is closed, the chances of recovering at least a minimal part of the lost cryptocurrency are incredibly minimal. This is further complicated by the lack of a high-quality legal framework regulating the cryptocurrency market!
Ways to minimize risks:
- Do not keep a lot of bitcoins and altcoins on the accounts of cryptocurrency exchanges, and especially you cannot trust all funds to one service;
- Try to deposit / withdraw coins from the trading platform more often after performing the necessary operations.
The reasons for the loss of cryptocurrency noted above seem unlikely and frivolous, however, the impression is transformed into a bitter sense of reality when the loss of digital money occurs. Experts advise to constantly take into account the risks and scrupulously observe the nuances of crypto security wherever cryptocurrency is involved. For the reliable preservation of crypto capital, first of all, its owner is responsible. You can always save a large share of the formed cryptocurrency portfolio or even secure your money savings!