How to protect your digital assets
3 tips for crypto owners to avoid the loss of their digital assets
While blockchain is known for its security functions thanks to cryptography and the technology’s decentralized nature, it’s still inevitable for errors to occur that can lead to the loss of the digital assets. But more often than not, we found that crypto incidents are caused by human errors. An analysis by the Wall Street Journal suggests that Bitcoin users have misplaced about 20% of all existing tokens, which will possibly no longer be returned to circulation.
While this problem has barely created a dent in the crypto market, it certainly is a big enough concern for individual crypto holders. After all, many of them have spent years just accumulating their wealth, only for their crypto to be taken away by accidents that are avoidable.
In this blog, we’ll go through the top three causes of crypto loss and how you can avoid them.
Losing your private key or authenticator backup key
Think of your private key as the password to your crypto wallet account. Only if you lose it, it’s gone forever. Private keys cannot be recovered or reset, unlike in centralized finance institutions where you can request for a new username and password. Since you won’t be able to access your crypto account without your private key, you won’t be able to spend your crypto assets anymore as well. If you are using a hosted wallet, it is important that you activate 2FA and keep your authenticator backup key safe.
How you can avoid this
Tip 1: It’s standard among crypto wallet providers to tell users to write down their private key and keep it somewhere safe. You can do this the traditional way, which is physically writing your private key or authenticator backup key on a piece of paper rather than keeping it in the cloud, which is susceptible to hacking, or saving it on your phone or a USB, which can be stolen, damaged, or lost. However, it’s also important to note that you might lose the paper or document where you wrote down your private key as well. Make sure that you keep it in a place that you’ll always remember.
Also, we want to remind you to activate facial (or bio) authentication instead of typing private key or password. Connecting via public Wi-Fi or opening an unknown link will expose your data to the eyes of the hackers, including every word you type and send via public wi-fi network.
Sending crypto to the wrong address
There are many cases where crypto holders accidentally send crypto to the wrong address. It was either sent to the token contract address or to the receiving address that is on a different blockchain network. Unfortunately, it is irreversible as blockchain-based transactions cannot be modified or canceled. Since the personal information of wallet users remains anonymous as well, it’s nearly impossible for you to reach out to them and ask them to return the funds. Some crypto wallet providers may have ways of retrieving crypto sent to wrong addresses, but they often take a long time to process.
How you can avoid this
Tip 2: Always double check your transaction details including receiving address of the correspondent token and its supporting blockchain network before sending crypto as you may not be able to retrieve the asset afterwards.
For example, USDT in both XPOS and XWallet support ERC20 only. Sending USDT via BEP2, BEP20 (BSC), OMNI, TRC20 to your XWallet or XPOS account will result in the loss of your tokens.
Sending crypto to scammers
It’s a general rule of thumb in finance that if an offer sounds too good to be true or it doesn’t have sufficient or credible data to support its cause, it’s most likely a scam. Falling for fake ICOs, exchanges, and apps is more problematic in the crypto world because, as mentioned before, it’s impossible to reverse, modify or cancel transactions on blockchain.
How you can avoid this
Tip 3: Educate yourself on the common kinds of crypto scammers. They often come in the form of fake ICOs, cloned phishing websites, fake technical support teams, cloud mining scams, and more. Research on the company that you’re dealing with and read their white paper. Never give your password, private key, or any other security codes to anyone under any circumstance. Additionally, look out for special characters or typos in the name of the company and their email address.
We’ve also set up a section to protect the safety of your digital asset when using our services. It is a very useful resource for you to read and avoid the loss of your digital assets: https://support.pundix.com/hc/en-us/sections/360003383931-Security
As more and more individuals explore the wonders of crypto, partly due to the constraints on fiat money caused by the ongoing COVID-19 pandemic and the security of Bitcoin gradually improving, it’s important that beginners take note of these tips. Many blockchain-based solution providers today also supply less daunting ways of how new crypto holders can use their digital assets.
Cyber attackers and crypto scammers are getting smarter by the day. The only way you can beat them and protect your assets at the same time is to be cautious and conduct extensive research.