Special ‘wallets’ to keep hackers at bay
Cryptocurrency is a risky business to start with, with a volatility that lets you gain or lose lots of money quickly. Here’s how to protect your bitcoin.
Cryptocurrency is a risky business to start with, with a volatility that lets you gain or lose lots of money quickly. Further, you run the gauntlet of at least three more ways your investments can evaporate.
Firstly, you could fall prey to scammers operating fake or manipulated cryptocurrency exchanges where you have no consumer rights when your funds disappear.
Secondly, cyber criminals have hacked exchanges, taking both cryptocurrency and dollars left there. Recently, Bitmart confirmed a security breach had allowed hackers to steal $US150m ($209m) from its exchange.
Thirdly, the exchange itself could go bust. The most spectacular example was the Japanese crypto exchange, Mt Gox, in 2014, with 850,000 bitcoins missing.
Just this month, two Australian currency exchanges failed. Melbourne-based myCryptoWallet collapsed into administration and Blockchain Global went down with investor losses of more than $50m. Australian-based ACX went into voluntary liquidation in 2020 with a reported $7.4m of investor funds lost.
Security experts say investors should keep their cryptocurrency and dollars out of the exchanges when not transacting, storing them in secure personal “wallets” where only they have the keys to access and operate them – so-called non-custodial wallets.
One approach is non-custodial “software wallets”. Exodus offers wallets for more than 100 cryptocurrencies and is available as a mobile app or desktop program.
Guarda, too, is available as an app or desktop application and is non-custodial. Electrum is popular among bitcoin users, the Bread app is for mobile users with iOS and Android wallet apps, while Atomic Wallet handles more than 500 crypto coins. Just don’t lose your keys!
An even safer option is to store your cryptocurrency offline in hardware wallets. When you need to access your crypto, you connect your hardware wallet to your computer by a USB cable or by Bluetooth.
-
Ledger wallet
Ledger sells two popular hardware wallets – the Ledger Nano S ($109) and Nano X ($199). They look a bit like USB sticks. The more basic Nano S connects to a Windows, Mac or Linux computer, or iOS and Android mobile device with a USB cable.
The Nano device has a small screen and a secure element chip and lets you trade, send, receive and exchange crypto using the downloadable Ledger Live desktop program and smartphone app.
One signature feature of Ledger is applications you store on the device and the Nano S supports three of them. The Ledger Nano X gets rid of the need for a USB cable with Bluetooth connectivity and lets you install up to 100 of these Ledger apps.
These apps perform a number of tasks. First there is the security. The Ledger system depends on you creating a 24-word recovery phrase which you also store securely offline. Without it, your crypto is cactus.
Apps access individual private keys and crypto addresses for each currency you store which are generated from your recovery phrase. The keys for each of your currencies are different and are used for verifying transactions.
While you can transact with your favourite exchange and send and receive crypto from Ledger Live, you can use ‘trusted’ third party apps for slicker connectivity with participating exchanges such as Binance and IDEX and wallets such as Guarda and MyCrypto. Ledger says trusted apps are prohibited from interacting with one another.
Ledger says its devices store and manage more than 1800 coins and tokens but most of this is through third-party apps and wallets.
-
Trezor wallet
The Trezor Wallet is more computer mouse-shaped and stores more than 1400 cryptocurrencies and more than 1000 supported tokens, including all Ethereum-based tokens. Trezor models are USB-connected and link to desktop and mobile systems.
There are two common models – the Trezor One (about $84) and Model T (about $298). The Trezor One has a monochrome display and two-button operation while the Trezor Model T offers a small full-colour touchscreen.
Model T additionally offers a Shamir secure back-up and it can act as a second-factor authenticator as a FIDO2 security key.
Security is afforded by a 12-24 word seed phrase and your private keys are not accessible online.
You enter a PIN each time you perform a transaction but it changes. Trezor rearranges and displays the current PIN on its screen. Changing it renders ineffective any attempts to gain access through keylogging.
Bear in mind there was a reported hack of a Trezor with its non-secure chip in 2017. You needed physical access to it.
The hack involved connecting two pins inside the Trezor with something like a paper clip. That enabled the downloading of contents and the subsequent uploading to another Trezor.
The company reportedly swiftly applied a hot-fix to it and said it was of little consequence.
Atlassian founders add $4bn to their personal fortunes
The personal fortunes of two of the nation’s richest businessmen rocketed by a massive $4bn on paper Friday when investors responded to their tech company beating revenue expectations.
How DeepSeek has exposed the short lifespan of monopolies
The top investors will tell you that monopolies are the best investments money can buy but as the emergence of China’s DeepSeek shows, assumptions about sectors can be short lived.