Can someone steal my cryptocurrency wallet?
Bitcoin has proven to be a secure, cyberattack-proof network. Nevertheless, cryptocurrency stored in virtual wallets and exchanges can be vulnerable. In 2021 alone, cryptocurrency theft led to losses totalling 14 billion dollars for millions of users worldwide.
Bitcoin’s blockchain technology has never been hacked and has emerged as one of the world’s most secure technologies. But this does not mean that there are no risks to owning Bitcoin. In fact, unless you have adequate security in place, your wallet could potentially be breached and your cryptocurrency stolen.
The workings of the Bitcoin network—which has never been breached—are one thing, and the storage of cryptocurrency is quite another. When we acquire a token of Bitcoin, Ethereum or any other cryptocurrency, we store it in a virtual (or hot) wallet, or in an exchange or a highly secure digital wallet that does not require an internet connection (a cold wallet). It is precisely in the way we store our cryptocurrency where vulnerabilities arise that allow hackers to access our accounts and steal the cryptocurrency we have purchased.
The best ways to protect your crypto
One of the most widespread ways to steal cryptocurrency is through phishing (identity theft), a technique also used for traditional bank accounts. Hackers send an e-mail posing as our exchange platform and request our personal data. If we surrender this data, we can consider our cryptocurrency lost. But this is not the only technique they use. They have also been known to deploy Trojan malware, keyloggers and bugs in smart contracts, among other dark arts.
There are several ways to store cryptocurrency, as outlined in the academic paper Wallet key management in blockchain technology. There are online wallets, “that connect to the internet and include: online web wallets and Smartphone apps wallets,” and there are wallets that “stay offline and include: paper wallets, hardware wallets and brain wallets,” as Dominic Bucerzan and Crina Anina Bejan explain.
The first are known as hot wallets, while the second are known as cold wallets. However, there is another type of wallet known as warm wallets. Hot wallets and warm wallets are the most commonly used, as they are the ones we use by default when we buy a cryptocurrency and leave it stored in a bank or exchange portfolio. Meanwhile, in the case of cold wallets, we would send the cryptocurrencies to a wallet that is not connected to the internet and which is also physical and very similar to a pendrive.
The first step is to look for licensed, regulated and trusted providers that are supervised. According to the International Security League, in 2021, password theft led to cryptocurrency theft amounting to 14 billion dollars. Experts strongly recommend activating two-factor authentication, rather than just a password to access the wallet. Likewise, cryptoinvestors are advised not to use the same password as on the other platforms, and to use a complex password that is not easy to obtain. Another good tip is to use several wallets to diversify your assets, which prevents all your cryptocurrency from being lost in a single hack.
How BBVA safeguards your digital assets?
In this regard, at BBVA in Switzerland we understand that the depository and custody of these assets is the cornerstone of trust in this revolution, and our mission as a bank is to play an absolutely critical role, facilitating liquidity with full guarantees, storing our clients’ digital assets off the company’s balance sheet and ensuring a clear system of convergence between both worlds.
Driving our goal of leading the transformation of banking globally, we are giving everyone access to the opportunities of this new era. Thus, a few months ago we integrated into our operating system the Gas Station, an innovative digital service created to enable our clients to safely trade digital assets 24/7 (bitcoin and ether) without worrying about the counterparty risks and mining/gas costs derived from the Blockchain.