The vast and digital world of Web3 can be a minefield when it comes to the security of your digital assets. It is like we are modern-day treasure hunters. But just like adventurers need to guard their treasures from pirates, you need to protect your digital wealth from online threats and hijackers. There are 7 simple, but super effective, steps that you can take now, to keep your crypto treasure chest locked up tight—from understanding what Web3 assets are to implementing advanced security measures.
Securing your Web3 assets is all about understanding the basics of crypto security, using common-sense wallet practices, managing your passwords like a pro, staying on guard against phishing attempts, embracing two-factor authentication, following good online habits, protecting your secret keys, and having a plan for emergencies. Together, these steps create a safety net for your digital riches.
Based on statistics obtained from Metav.rs, web3 market capitalization is currently estimated at $27.5 billion, from USD 3.2 billion in 2021, and is expected to expand at a compound annual growth rate (CAGR) of 47.1% from 2023 to 2030. The report further predicts that by 2030, the Web3 market will have reached a worth of $81.5 billion, thus necessitating the serious need to understand how to safeguard your crypto assets in this growing new digital age. Without adequate safeguarding measures put in place, you could lose your digital assets in an instant.
Web3 is like the Wild West of the internet. It is the latest version of the web where there is no sheriff to keep things in check. It is designed to be open, and secure, and puts you in control of your digital properties. But with great power comes great responsibility, and the security of your web3 assets. Cryptocurrencies and decentralized applications (dApps) serve as the backbone of Web3 and ensuring their security is your top prerogative. Unlike regular banks that have guards and alarms or customer service hotlines to call if ever things go wrong, in Web3, it is up to you to protect what is yours. Nobody does that for you.
What’s WEB3, and Why Is It a Big Deal?
In 2014, Gavin Wood, founder of Polkadot and co-founder of Ethereum, used the term “Web3” to describe a decentralized online ecosystem based on blockchain technology.
Think of Web3 as a fancy upgrade to the internet. Unlike the old web controlled by big companies, Web3 is all about giving you control. It runs on blockchain technology, where your digital treasures, like Cryptocurrencies (BTC, ETH, and Altcoins), NFTs, and tokens are kept safe. These digital treasures sit in your digital wallet and can be valuable in lots of ways, like having your digital piggy bank, or access rights to decentralized services.
The Importance of Protecting Your Crypto Assets in WEB3
Web3 is worth a whopping $27.5 billion, and it’s growing fast. To put that into perspective, it’s like having a treasure chest that’s getting bigger every year. But because there’s no big company to help you out if something goes wrong, we need to be extra careful. Mistakes in Web3 can cost you big time. That’s why crypto security in the web3 market is important because it helps protect users from financial loss and maintain trust in the system. It’s not just about keeping your stuff secured; it’s about making sure you don’t lose it.
As Gavin Wood said, “Web3 is the idea that we can have a decentralized, open Internet—one where users are in control of their data and where they have a say in how their data is used”
Crypto Security Basics
Building a Solid Security Foundation
There are many suggestions online on the ethos and pathos of keeping your digital funds safe and secured. However, the major key to achieving this is having an in-depth understanding of what crypto security and web3 assets are all about and the risks and challenges that come with it, amongst a few other things.
What’s the Deal with Web3 Assets and Crypto Security?
Web3 assets are digital assets that exist on a blockchain. They are like digital gold that lives on blockchain technology, acting like a high-tech vault for your treasures. They include cryptocurrencies like Bitcoin and Ethereum, as well as non-fungible tokens (NFTs) and other digital assets.
Crypto security, on the other hand, is simply a term used to refer to the measures users of the web3 resources implore to safe-keep their hard-earned funds. They range from basic steps like having a strong password combination to advanced measures like using VPNs and setting up 2FA for your accounts.
Risks That Lurk in Web3
Web3 assets face all sorts of risks. There’s no boss to protect them for you, so you have to use smart practices and technology to keep your treasure safe. Just in the first half of this year, 2023, people lost $656 million to phishing scams, rug pulls, and hacks, according to reports by Cointelegraph, while Beosin Alert, a leading global blockchain security company, reported a massive $889.26 million in Q3 2023.
Although these figures are significantly lower than that of H1 and H2 in 2022—which were $1.91 billion and $1.69, respectively for hacks alone —the threats today are still imminent. The potential for financial gain in crypto is undeniable, and so are the risks. You have got to be on your guard at all times.
These risks stress the importance of putting in place robust security measures to mitigate against any possible risk of hacks or thefts.
Statistics by CHAINALAYSIS showing Total Value of Stolen Crypto by hacks
7 Ways to Protect Your Web 3.0 Assets Now
1. Keeping Your Wallet Safe and Sound:
Your crypto assets are your digital treasure. Protecting them is essential, much like safeguarding your valuables in the physical world. Choosing a secure wallet is one of the first steps towards safeguarding your crypto assets.
Choosing The Right Wallet
There are several types of wallets available for storing crypto assets, including hardware wallets, software wallets, and paper wallets. Each type has its pros and cons.
i. Types of wallets (e.g., hardware, software, paper):
Hardware wallets are physical devices that store your private keys offline, e.g. Ledger Nano X,
Software wallets are applications that you can install on your computer or smartphone, e.g. mobile and desktop wallets, BitPay.
Paper wallets are physical printouts of your public and private keys, usually as QR codes for ease of use.
ii. Pros And Cons of Each Type
Hardware wallets offer high security but can be expensive. They are like Fort Knox’s digital assets but might be less convenient for everyday use.
Software wallets are user-friendly but vulnerable to online threats like sneaky viruses or hacks.
Paper wallets are ultra-safe for long-term storage but are easily lost or damaged.
Backup And Recovery Methods
It helps protect your funds from loss due to theft, hardware failure, or human error, as the case may be. Consider it your safety net or insurance policy should things ever get South with your assets.
Mnemonic Phrases And Their Significance
A mnemonic phrase, also called a Secret Recovery Password (SRP) is a list or string of 12-24 words that you can use to recover your funds if you ever lose access to your wallet. They are like the master key to your crypto kingdom, so keep them safe.
2. Mastering Passwords Like a Pro
Strong passwords make it harder for attackers to gain access to your accounts or steal your assets. They act as the first line of defense. If someone guesses your password, they can potentially loot your web3 accounts.
What You Can Do: Best Practices for Creating Strong Passwords
Some best practices for creating strong passwords include:
- Use a combination of uppercase and lowercase letters.
- Include numbers and special characters like “!”, “@”, or “$”.
- Avoid using easily guessable information like your name, birthdate, or common words. Instead, get creative and use a phrase and replace some letters with numbers or special characters. For example, “I love crypto” can become “1L0v3CrYp7o!”. That is a smarter move and a more secure password right there!
Use of Password Managers And Their Benefits
Password managers are a lifesaver. They are like trusted guardians for your keys. They store your passwords securely and can even generate strong, unique passwords for each of your accounts. You only need to remember one master password, which is like the magic key to your secure password vault. Examples of reliable password managers include 1Password, Dashlane, and Roboform.
3. Outsmarting Phishing Attacks
What is Phishing in the Context of Crypto And How Can One Identify Phishing Attempts?
Phishing in the context of crypto involves tricking users into revealing their private keys or other sensitive information. It is that simple!
It is a digital con game where sneaky scammers impersonate trustworthy sources to trick you into revealing your private information. It is like someone disguising themselves as your best friend to get your house keys.
How to spot phishing attacks:
- Phishing tricks often involve suspicious links or emails.
Be wary of emails or messages with strange links or sender addresses. They are designed to trick you into revealing sensitive information.
Phishers usually pretend to be popular websites, but tiny mistakes in their disguise may reveal their deceit. For instance, you might receive an email from “Paypall” (notice the extra ‘l’) instead of “PayPal.” Be a detective and look out for these clues.
- They may also use social engineering tactics to trick you into revealing sensitive information.
Phishers often employ psychological tricks. They might pretend to be a distressed friend or claim you have won a contest. Always verify such claims, especially when they involve sharing sensitive information.
Protecting Yourself From Phishing Attacks
The key to thwarting phishing scams is skepticism. Double-check everything. Verify the sender’s identity, scrutinize URLs, and never share your private information unless you are certain it is from a genuine source.
4. The power of Two-Factor Authentication (2FA)
Two-factor authentication (2FA) involves using a second factor, such as a text message or an app on your phone, to verify your identity when you log in to an account. Think of 2FA as having two padlocks on your front door. The idea is to add an extra layer of protection to your digital account. To breach them, a hacker would need both your password and a unique code generated by your 2FA device.
How to set up 2FA on your account
Setting up 2FA is like locking your account with an additional padlock. To do that, you use an app like Google Authenticator or receive codes via text message. Go to the settings on your account, or simply search for ‘Two-Factor Authentication’ on your account search query, and follow the prompts. Even if someone discovers your password, they will not be able to access your account without the second code.
Backup 2FA Methods
Backup 2FA methods can help you regain access to your account if you lose access to your primary 2FA method. It is like having extra keys in case you lose your main one. As a bit of general advice, do not rely solely on your phone for 2FA.
As a backup, keep printed codes or hardware tokens handy, in case you lose your phone.
5. Safe Browsing and Online Behavior
Secure browsing practices for web3 users
Secure browsing practices for crypto users include, but are not limited to:
- Avoiding suspicious websites:
Just as you wouldn’t wander into a dark alley at night, do not visit suspicious websites. Stick to reputable sources for crypto-related information, and double-check URLs to ensure they are the real deal. Phishing sites can be cleverly disguised.
- Using VPNs or Secure Networks:
Virtual Private Network (VPN) is like installing a security gate around your online activities. It encrypts your internet connection, making it harder for hackers to spy on you. Also, avoid using public Wi-Fi networks for sensitive transactions. It makes your account vulnerable at that moment for hackers to spy on you.
- Being Vigilant About Phishing Attempts.
Like earlier, constant vigilance is needed to recognize and avoid social engineering attacks, which involve manipulating people into revealing sensitive information. Be cautious about sharing personal information and funds with anyone, even if they appear trustworthy. Verify requests for sensitive data and be skeptical if someone pressures you for quick action.
6. Storing Private Keys Securely
Your private keys are what allow you to access and control your digital assets. If an attacker gains access to your private keys, they can steal your funds or worse hijack your account and that is not a pleasant experience to have.
Best Ways to Keep Private Keys Safe
Generally, the best practices for storing private keys include, but not limited to:
- keeping them offline whenever possible—this is the best and most recommended,
- using secure storage methods like hardware wallets, and
- never sharing them with anyone.
7. Preparing for the Unexpected: Your Safety Plan
It is always a wise and safe practice to prepare for the worst-case scenario, a rainy day if you like. Creating a plan to recover your assets if the unexpected happens is a way to go.
Here are suggested recovery plans you can put in place now to prepare for any unexpected intrusion or threat to your web3 account:
- Creating a Disaster Recovery Plan
This simply involves outlining the steps you would take to recover your funds if you lost access to your wallet or account. Consider steps like using backup codes, contacting your wallet provider, using a recovery service, or having an emergency contact list. This way you can stay way ahead of the game. It also gives you leverage. Because sometimes, the difference between a big loss and a small one could be a matter of time, that is, how fast or quickly you can take control of your account/wallet, if hacked or hijacked.
- Crypto Estate Planning and Escrow Services
Crypto estate planning involves making arrangements for your crypto assets to be inherited or passed on to your loved one in the event of your death. This may require the services of a lawyer, and this is where escrow services come in.
Escrow services are like hiring lawyers for your crypto estate, who can hold your private keys in trust and release them to a designated person—like a next-of-kin— if something happens to you.
Some wallets or platforms already have this in place during the onboarding or creation of the account. Find out from your wallet service provider/platform to be certain.
- Dealing With the Loss of Assets
Dealing with the loss of assets can be difficult, but it is important to stay calm, consult with professionals, and follow your recovery plan. If you have taken the right precautions, like those provided in this present article, you should be able to recover most, if not all, of your funds.
Crypto security is a dynamic phenomenon, with new threats and challenges emerging regularly, with new research and development (R&D) in tech. Staying informed and adapting your security practices are key to protecting your digital wealth. As Vitalik Buterin, co-founder of Ethereum said in 2023, “Security is not a one-time effort but an ongoing process. It requires continuous learning and vigilance”.
Stay curious, explore, and never stop enhancing your crypto security knowledge. Your digital assets and peace of mind are worth it.
Stay safe out there!