Art of Blockchain Security – Protecting Your Assets in Crypto World
Blockchain security threats have seen a rise where we see common threats include 51% attacks, Sybil attacks, DDoS attacks, and vulnerabilities in smart contracts or protocols. Centralized exchanges remain major hacking targets, with over $20 billion stolen in 2022 alone. In recent years, several major cryptocurrency exchanges also have experienced massive security breaches, resulting in staggering losses of user funds totalling billions of dollars.
In light of these persistent threats, the art of blockchain security entails designing robust encryption, building in trustless principles, gaming out attack scenarios, creating fault tolerance, and establishing effective governance. Security must be woven into the blockchain’s core fabric.
The Art of Blockchain Security
A multi-dimensional approach is ideal – combining private keys, cold storage, bug bounties, formal verification, modular architecture, and other tools for risk mitigation. For example, CoinEx uses a hybrid wallet infrastructure with a combination of hot and cold wallets to balance security and liquidity. The majority of assets are kept in cold storage while a smaller portion remains in hot wallets for immediate trading needs. This minimizes risks from potential hot wallet breaches.
Ongoing stress testing, audits, and peer review are critical. SlowMist recently announced a strategic partnership with CoinEx to jointly strengthen security and build robust defenses. The alliance will allow SlowMist to lend its extensive threat intelligence and forensic capabilities to bolster CoinEx’s security systems, with a focus on tracking money laundering, tracing stolen assets, and identifying emerging threats.
Leading centralized exchanges like CoinEx have implemented robust security measures to protect user assets. Coinbase maintains internal ledger systems that track users’ account activities in real-time. CoinEx recently launched Shield Fund to better safeguard its users’ assets, funded by allocating 10% of all trading fees into a dedicated pool,
While challenges remain, blockchain’s inherent properties of transparency, cryptography, and decentralization provide a strong security foundation if implemented thoroughly. Security vulnerabilities can still emerge within the complex interactions between protocols, platforms, and users. Neglecting security principles in blockchain design or code can leave dangerous loopholes. Therefore, ongoing vigilance and proactive security practices are essential. The right mix of vigilance and creativity will further bolster robust security as blockchain aims to securely transform finance, technology, and beyond.
How to Better Protect Your Crypto Assets
Enable Multi-Factor Authentication (2FA)
Activating two-factor authentication (2FA) provides an extra layer of account security on top of your password. With 2FA enabled, accessing your accounts requires both your password as well as a randomly generated one-time code from an authenticator app or SMS. This significantly decreases the risk of account takeovers, even if your password is compromised. Be sure to enable 2FA on any exchange accounts, wallets, or crypto services you use.
Use Strong, Unique Passwords
One of the simplest security steps is using strong, randomized passwords that are unique for each platform. Avoid reusing passwords across accounts. Strong passwords include a mix of uppercase and lowercase letters, numbers, and special symbols. You can use a password manager to generate and store secure passwords rather than creating them yourself.
Keep Private Keys and Recovery Phrases Safe
Never share private keys or recovery phrase seeds with anyone, as they grant full access to your funds. Store them offline as a physical paper copy in a secure place only you can access, or on an encrypted external storage device not connected to the internet. Memorizing the seed phrase can also keep keys accessible to you alone.
Use a Hardware Wallet for Cold Storage
For maximum security, store the bulk of your crypto holdings in a hardware wallet like Trezor or Ledger. Hardware wallets keep your private keys offline and only connect briefly for transactions. Even if your computer is hacked, your crypto remains protected from theft. The inconvenience of limited connectivity is outweighed by the strong security benefits.
Watch Out for Scams
As the crypto space grows, so do scam attempts promising false giveaways, high returns, or other tactics to lure you into relinquishing funds. Be wary of any offers that sound too good to be true. Only send crypto to others at your discretion, and thoroughly vet any new projects before investing.