Insights from Trust Wallet and BNB Chain on Crypto Wallet Security

As a seasoned digital nomad and crypto enthusiast who has seen more blockchain projects than I can count on one hand, I’ve learned that choosing the right wallet is as essential as picking the perfect passport for global adventures.

Security of tokens should be the number one priority of all crypto users. Recent incidents such as the DEXX security incident where at least $21 million worth of user funds was lost, are evidence of the inherent risks of the crypto world. In this scenario, attackers compromised over 1000 users by simply taking advantage of the existing shortcomings of the platform’s private key management.

The One Golden Rule of Crypto: Not Your Keys, Not Your Coins

First, select a reliable wallet and apply top-notch security measures available. Crypto wallets come in two primary types: hot wallets, connected to the internet, and cold wallets, stored offline. Additionally, there are smart contract wallets that allow programming capabilities.

Let’s delve into the perspectives of BNB Chain and Trust Wallet regarding the security of cryptocurrency wallets, and how users can make wise choices guided by their insights.

Lessons learnt from the DEXX security Issue.

To fully grasp the concept of crypto wallet security, let’s first delve into the details of the latest security event that has been previously discussed.

On November 16th, 2024, the well-known on-chain trading platform DEXX suffered an attack that predominantly impacted Solana accounts. This incident led to the loss of approximately $21 million in user assets, affecting around 1000 different wallets.

The community is worried following discovery of over 9,000 unauthorized transactions being utilized during the attack. Further probes into various breached accounts revealed that the thief still has the stolen funds. This suggests strongly that one individual was responsible for the incident.

The fundamental issue behind the incident was traced back to a weakness in the storage system of DEXX’s server, particularly concerning private keys. This API from DEXX, designed for exporting wallets, mistakenly disclosed unencrypted, private keys. This evidence suggests that DEXX kept private keys on its servers, which contradicts its claim of being a non-custodial wallet – quite an ironic turn of events.

Several measures can be taken to prevent this sort of breach.

Avoiding Storage of Private Keys: Private keys should never have been stored on DEXX’s servers, as this practice directly contradicts its non-custodial claims.
Encryption: Sensitive data should be encrypted during transmission and storage to protect delicate user information.
Regular Security Audits: Regular security audits should have been conducted to identify vulnerabilities before they were exploited.

Ensuring that the chosen wallets have undergone thorough audits is crucial for users’ peace of mind. After all, when investing large sums of money, it’s advisable to opt for well-established and time-proven platforms to minimize potential losses.

What to Look for in a Secure Wallet?

Consider the following features when looking for a secure cryptocurrency wallet.

Secure Key Management

Trustworthy wallets ought to prioritize robust key safety. It’s essential that all private keys are produced, kept, and handled as securely as feasible. Crucial elements of secure key management encompass:

Backup and Restore Capabilities: It’s important for users to have access to reliable, secure methods for backing up their data. Additionally, they should have the capability to restore their private keys or recovery phrases whenever necessary.

Seed Phrase Encryption: Ensure that the wallet has strong encryption measures for seed phrases.

As a researcher, I advocate for the usage of decentralized digital wallets. These wallets should never hold the user’s private keys on centralized platforms. Instead, it is essential for users to maintain complete ownership and control over their own private keys.

Wallet History and Security Licenses

As a novice Web3 user, choosing a secure digital wallet can prove to be quite a daunting task. Navigating through the multitude of options available, I often find myself questioning if the chosen wallet adheres to the highest standards of security and follows established best practices and protocols.

With that being said, follow these steps to choose a secure wallet.

Begin by checking the past records of the wallet and opting for one with a proven history and good reputation. These are likely to follow strict security protocols.
Check whether the wallet has passed multiple audits and holds a valid security license.

Follow these above steps to make informed decisions.

Security Scanners and Alerts

Users often struggle to fully grasp the implications of a transaction or using a decentralized application (dApp) due to the complexity involved. When faced with a message or transaction prompted by a dApp, it demands a significant amount of trust from the user because it can be challenging to predict all possible outcomes of the transaction solely based on the information provided on the screen.

Luckily, Trust Wallet’s Security Scanner function tackles this issue effectively. It works by scrutinizing transactions and flagging potentially harmful patterns before funds are transferred, thus minimizing the risk of users agreeing to or endorsing fraudulent or undesirable transactions. This security measure has successfully prevented $450 million from falling into wrong hands.

Wallets equipped with this function mimic transactions, presenting the outcomes directly to users rather than merely displaying messages or transactions requested by a DApp. This way, the actions taken by the user align with their expectations.

Crypto wallets are known as the gateway to interacting with dApps. But since the users do not fully understand the imitations of transactions, the security scanner feature should be used.

Step-by-Step Guide for Choosing a Wallet

As a researcher exploring the cryptocurrency world, I’ve found that the crypto wallet serves as my primary interface. It acts as the entrance to decentralized applications (dApps) and blockchain networks. Therefore, selecting the right wallet is crucial, regardless if my focus is on playing blockchain games or managing assets or executing transactions.

Before you select a wallet, ask these questions to yourself.

Do you want to hold assets long-term or are you simply a day trader?
What is the maximum amount of risk you can take?
Do you want to engage with dApps, or do you need basic storage or transaction capabilities?

Crypto Wallet Types

Crypto wallets can come in two forms – software wallets and hardware wallets.

Software wallets can be opened through smartphones, web browsers, or computers. It’s effortless for users to interact with Web3 decentralized apps or manage their digital assets just by a simple click.

As a researcher delving into the world of cryptocurrency, I’ve come to appreciate the widespread appeal of software wallets. Their primary allure lies in their versatility and immediate accessibility. These digital wallets are not just limited to storing cryptocurrencies; they can also effortlessly connect with decentralized applications (dApps), expanding their utility to various realms such as crypto transactions and even digital identification purposes.

A good example of a software wallet is Trust Wallet. It is compatible with both desktops and mobile devices.

When using a hot wallet on your PC or mobile, it’s crucial to install antivirus software for malware protection to ensure the security of your personal computer or phone. Hardware wallets on the other hand are physical devices used to store private keys in an offline environment. They are considered the safest option for crypto management and storage for this reason. It stores private keys away from internet connectivity.

Hardware wallets offer enhanced physical security and are perfect for individuals who want to securely store cryptocurrencies over a prolonged period without frequent transfers. They’re also suitable for those seeking an additional layer of protection. However, it’s worth noting that these wallets may not be as user-friendly since actions like transaction confirmation can take more time.

Can hardware and software wallets be used simultaneously?

It’s feasible to utilize both physical (hardware) and digital (software) wallets concurrently. For instance, you can link a device like Ledger, a hardware wallet, with the browser extension function of Trust Wallet, a software wallet.

Are smart contract wallets safe?

Smart contract wallets operate using self-executing contracts designed to act as digital wallets, offering functionalities like signature verification, management of assets, and command execution. Many developers prefer adhering to the ERC-4337 industry standard when building a smart contract wallet, although alternative methods are available too.

Smart contract wallets offer enhanced security and user-friendly features in comparison to conventional wallets. These advanced wallets provide options like shared ownership accounts, adaptable key administration, payment of tokens for gas fees, account restoration, grouped transactions, and a sophisticated user interface backed by security assessments.

Conclusion

Navigating the realm of cryptocurrencies offers both enticing benefits and hidden dangers. The crucial point is to stay knowledgeable and vigilant. Prioritize security by opting for wallets that offer robust security features. Keep in mind, it’s imperative to make thoughtful decisions and comprehend your requirements before selecting a specific type of wallet.

In conclusion, it’s crucial to prioritize your own security. Always stay alert, refrain from disclosing private details, and utilize various storage solutions for added protection.

2024-12-19 10:38