How do I keep my Ethereum safe and secure? This is a question that many Ethereum holders ask themselves, and rightfully so.
Every year, countless people lose their ETH due to hacks, fraudulent websites, armed robbery, and other means. These coins could have permanently re-shaped their life, yet due to a poor safety strategy, they are now permanently lost and the dreams are forever out of reach.
The problem that many people face is that they want to learn how to keep their Ethereum safe, but when they start doing some reading they realize that most of the available information is hard to understand and incomplete.
That’s precisely what we aim to address in this brief article. In this guide I will show you which methods you should follow to keep your Ethereum safe, together with simple actionable steps that you can follow to implement them.
After you finish reading this article, you will know exactly what to do next to store your Ethereum securely and make sure that it is not stolen or lost. Let’s get started!
Be careful who you tell about your Ethereum holdings
Rule number one in cryptocurrency is not to tell anyone how much cryptocurrency you hold. This not only applies to the online world through social media or forums, but also to your family and circle of friends. Even though your friends and family most likely won’t cause you any direct harm, they may do so unwillingly by mentioning your cryptocurrency holdings to a friend of theirs.
It is significantly easier for an bad actor to steal someone’s cryptocurrency, than it is to rob money from their bank account. This is mainly due to the partially anonymous nature of cryptocurrencies, while bank transfers are rather simple to trace back to an identity.
Countless people have already lost all their coins, and in some sad cases their life, because they openly shared their cryptocurrency holdings.
One sad case is the one of Pavel Nyashen, a russian cryptocurrency blogger that was found dead in his apartment after bragging about his cryptocurrency holdings on his youtube channel.
A few months prior to the incident, Pavel was already stolen $400k in cash and badly injured, and some speculate that the aggressors ended his live to make sure that he would not identify them.
That being said, please don’t get me wrong. It’s amazing to openly discuss cryptocurrency and blockchain and that you hold some Ethereum. In fact, if you ever assist a blockchain event or meetup then that will likely the main topic of discussion with other attendees.
However, if you want to keep your Ethereum safe then you should absolutely never comment exactly how much you are holding or give the impression that you might hold a large amount of ETH.
There are places in the world were people will be ready to commit horrible crimes for just a few hundred dollars, and if someone learns that you hold a few thousand in an asset where its easy to get away with theft, then you are putting yourself in danger.
Look out for phishing attacks
In a phishing attack, bad actors use sophisticated methods to pretend to be someone else in order to steal your Ethereum. This can be done in countless ways and has become significantly simpler with widespread adoption of the internet since the attacker can hide behind a computer screen.
The attacker could for example send you an email claiming to be the representative of a cryptocurrency exchange that you use, in order to steal your password. Another widely used phishing strategy are social media giveaway scams.
In this attack, the bad actor develops “Twitter bots” that pretend to be an official account of someone well known in the crypto space and that automatically reply to other tweets holding “Giveaways”.
However, these giveaways are nothing more than an elaborate heist since they ask people to send a certain amount of ETH to an address they control, and to expect to get back an amount that is 10 times larger.
Please keep in mind that the attack vectors mentioned above are just a fraction of the strategies that attackers use to steal your Ethereum through phishing attacks. They can also impersonate a person of authority on Telegram, create elaborate “airdrop” scams, and more.
Don’t trust, verify, and if something is to good to be true then it probably isn’t. That’s the mentality that you need to have to keep your Ethereum safe.
Consider purchasing a hardware wallet
There isn’t a safer way of storing Ethereum than on a cryptocurrency hardware wallet. A cryptocurrency hardware wallet is a physical devices that securely stores your private keys, leaving them out of reach of hackers.
Furthermore, on most hardware wallets outgoing transactions need to be manually accepted with the click of a physical button. This means that even if a bad actor could, for some reason, gain access to your hardware wallet remotely, he won’t be able to withdraw any funds unless he physically clicks this button on your device.
There are countless cryptocurrency hardware wallets, and they all support all major cryptocurrencies. In order to make it easier for you to find the one that fits you best, we prepared a comparison table of the best cryptocurrency hardware wallets, so definitely check it out if you’re looking to buy one!
That being said, please keep in mind that even cryptocurrency hardware wallets have their limitations. If you are being assaulted and an attacker holds a weapon to your face, then a cryptocurrency hardware wallet won’t be able to help you and your cryptocurrency will be lost.
Therefore, it is crucial that once you buy a hardware wallet that you hide it in a safe place and that you tell no one about it.
Never leave your Ethereum on exchanges
Due to the confusing nature of some Ethereum wallets, especially for people that are just getting started, many ETH opt to hold their coins on a cryptocurrency exchange for beginners like Coinbase, Binance, or Kraken.
This is often seen as a very simple way of storing cryptocurrency. However, while its true these exchanges are some of the most trusted companies in the cryptocurrency world, that does not protect them from hacks.
The first major cryptocurrency exchange hack happened back in 2013, when 850,000 Bitcoin were stolen from Mt Gox. At the time, Mt Gox was the largest cryptocurrency exchange, and many people lost all their coins which just a few years later ended up being worth a fortune.
Later in 2016, Bitfinex, the largest cryptocurrency exchange at the time, was also compromised and 120,000 Bitcoin were stolen. Instead of covering the losses from their own pockets, the exchange reduced the balances of all its users by 35%.
So if you had Ethereum on Bitfinex at the time of the hack, you would have lost a 35% of all your coins.
There is a famous saying by crypto holders that goes “Not your keys, not your coins”. This phrase aims to educate people into holding their cryptocurrency on a wallet they control in order to protect them from hacks and bad actors.
If you want to keep your Ethereum safe then you should always store them on your own wallet, and not on someone else’s (like an exchange).
That’s all for this guide! We also wrote an article with some general cryptocurrency security tips so make sure to check that one out as well.
Pascal Thellmann is an investor and marketer focused on the intersection of cryptocurrency and the legacy financial system. He co-founded Bounty0x, which at the time was the largest crypto freelance platform. Now Pascal dedicates his time to CoinDiligent and trading. You can get in touch with Pascal Thellmann on LinkedIn.