If you wish to experience the fullness of the Metaverse, cryptocurrency is crucial. Many applications are built on blockchain technology and the metaverse is typically decentralized. Decentralization refers to the fact that the Metaverse isn’t governed by a central authority, but rather by a distributed network.
On various marketplaces, cryptocurrency can be used to buy or sell Non-Fungible Tokens (NFTs). Virtual land investment can also be made using cryptocurrency. The Sandbox and other crypto games can use it as in-game currency. While this new frontier in technology is exciting and fun, it comes with security risks as well. Protecting your private keys is particularly important in this regard.
In cryptography, a private key is a large number that is used as a password. According to Investopedia, a blockchain address acts as a digital signature for cryptocurrency transactions. It also serves as proof that the transaction is owned by the owner.
Hot wallets, or wallets that are always connected to the internet and cryptocurrency network, are where many people store their private keys. Due to their constant internet connection, hot wallets are more susceptible to attacks.
Hackers breached the popular cryptocurrency platform Coinbase in 2021 by exploiting a vulnerability in their 2-factor authentication, exposing user credentials, and draining their accounts. Cybercriminals stole nearly $30 million dollars in cryptocurrency from 483 users’ digital wallets in the Crypto.com hack this year. The hack of $196 million from BitMart also involved a stolen private key that accessed two hot wallets.
Protecting Your Keys
Although social engineering plays a huge part in the retrieval of private information, there are some ways you can protect your private keys from adversaries.
I. Use Cold Storage
Wallets that do not connect to the internet, also known as hardware or offline wallets, are less likely to be compromised. During the transaction process, your keys, both public and private, are kept offline with cold storage. In order to use it, you connect it to your computer, which creates an address. After sending your crypto to that address, it is stored in your wallet.
II. Keep Your Devices Updated
On a regular basis, vulnerabilities are found that can be exploited to retrieve sensitive data. Because of this, patching is necessary on a regular basis.
III. No Text Files/Notes Apps
In the above case, you should not store your keys in text files on your devices. Paper and pencil (and preferably a safe) are the best way to store your private and mnemonic phrases.
IV. Use a Secure Internet Connection
Don’t use Wi-Fi at coffee shops or airports! To handle cryptocurrency transactions, make sure you are using a secure internet connection and preferably a VPN. In this way, you will be able to prevent attackers from intercepting your network traffic and gaining access to your private information.
V. Use a Strong Password
Passwords should not be easy to guess. The password should be complex and long. It is also recommended to enable two-factor authentication. The password should be changed regularly.
Bonus: Think Like an Adversary
An adversary may try social engineering to get you to divulge your password or mnemonic phrases in order to access your account if all else fails. Each pop-up, strange email and request for account reset that you see should be investigated. Perhaps a hacker is stealing your crypto funds to get rich quickly with your information.
In light of the exponential growth of the metaverse and the usage of cryptocurrency, protecting your private keys is as important as protecting your physical wallet.