Ever had a few million dollars right at your fingertips? It turns out, Stefan Tomas, a programmer, based in San Francisco, has $220 million locked away but is unable to access it because of a forgotten password.
Years ago, Stefan wrote down the password to unlock his IronKey, a small hard drive containing a digital wallet of 7,002 Bitcoin, and since lost the paper with its password.
After locking away his fortunes, Stefan has tried eight attempts at unlocking the IronKey with two attempts left before IronKey sieges the information and encrypts its fortunes forever.
Stefan’s story highlights an unfortunate reality for those playing with cryptocurrencies—in fact, 20 percent of Bitcoin, worth $140 billion, is lost or stranded in digital wallets. As more people trade and mine digital currencies like Bitcoin, understanding the potential security pitfalls is more critical than ever.
To avoid becoming a victim of a lost fortune due to poor password management, the following tactics help encourage better security practices, as well as staying safe with cryptocurrency.
Understand Storage Options
As with any online purchase, it’s important to do your homework and avoid any sketchy-looking e-commerce websites—the same goes for cryptocurrency trading websites. While there are no federally insured crypto websites, it’s crucial to still research reputations from other community investors.
As investors determine the type of wallet to store their assets, it’s essential to be mindful of all security issues at play.
There are four wallets to choose from, including software, hardware, paper, and crypto exchanges. Hackers regularly exploit the vulnerabilities in the crypto exchanges, so it’s best not to store large amounts of funds here.
Hardware wallets are best recommended for security since they require a 24-character key for access. However, users must be mindful not to lose the physical device or access codes. Software wallets allow users to store information digitally, and are an ideal solution for those trading in low volumes.
No matter what option you choose, it’s essential to store your key passwords in a secure, easily accessible location to avoid being locked out of any fortune.
Downloading a digital wallet such as a password manager ensures your password keys are accessible and cryptocurrency coins remain safe and within reach.
Maintain Password Best Practices
Not only should crypto users consider their storage options, but they should also implement security best practices to stay safe while playing with cryptocurrency.
When selecting a digital wallet, be sure to look for options that offer two-factor authentication or multi-factor authentication (MFA).
Selecting an exchange or wallet that offers this enhanced security makes it more difficult for hackers to break in and access your information.
Users should also employ basic password best practices to protect themselves online. Strategically choosing long, randomly generated passwords with a variety of symbols, digits, and capitalization can help strengthen your accounts’ security.
While these passwords may be harder to remember, using a password manager as a resource can help individuals store their passwords safely with ease of access.
Avoid the Next Bitcoin Misfortune
Stefan’s Bitcoin nightmare reinforces that nobody is exempt when it comes to the consequences of bad password behaviors. To avoid a similar mishap, crypto users need to follow security best practices and understand the security implications when choosing a storage option.
For crypto users, security education and awareness must be a top priority to decrease the number of password-related horror stories, and ultimately, gain your Bitcoin fortunes.