• Cryptocurrency wallets are software applications on computers or mobile devices such as phones or tablets. They use an internet connection to access the blockchain network for the cryptocurrency you’re using.
  • There are three cryptocurrency wallet types: software wallet, hardware wallet, and paper wallet.
  • If your crypto wallet is hacked, you have four steps to take: run a malware scan, transfer your funds, notify your wallet or exchange provider and the authorities change your login details and use more security features.

A cryptocurrency wallet is an application that functions as a wallet for your cryptocurrency. It is called a wallet because it is used similarly to a wallet where you put cash and car cryptods. Instead of holding these physical items, it stores the passkeys you use to sign for your cryptocurrency transactions and provides the interface that lets you access your crypto.

Everyone can access the blockchain thanks to modern cryptocurrency wallets. When cryptocurrencies were first introduced, sending them required typing lengthy keys by hand.

Cryptocurrency wallet types

Software wallet

Software wallets include applications for desktops and mobile devices. These wallets are installed on a desktop or laptop computer and can access your cryptocurrency, make transactions, display your balance, and much more. Some software wallets also include additional functionality, such as exchange integration if you’re using a wallet designed by a cryptocurrency exchange.

Hardware wallet

Hardware wallets are the most popular type of wallet because you can store your private keys and remove them from your device. These devices resemble a USB drive, and modern hardware wallets have several features.

You can make a cryptocurrency transaction on your computer or device by plugging in the hardware wallet. Most of them can sign cryptocurrency transactions automatically without requiring you to enter the key, circumventing a hacker’s ability to log your keypresses or record your screen.

Paper wallet

Early crypto users would write or type their keys on paper, which they called paper wallets. These evolved to include the keys and QR codes so wallets on mobile devices could scan them. However, paper wallets are easily damaged or lost, so many crypto owners do not use them anymore.

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How do you know if your crypto wallet has been hacked?

There’s just one easy way to tell if your wallet has been compromised. You can be sure that someone has accessed or taken control of your wallet if you notice any transactions that you did not authorise. Hackers might attempt to access the money kept in your wallet if it is linked to your bank account. As a result, you should review the most recent transactions in your bank account to look for any unauthorised withdrawals.

Run a malware scan

Even though there are ways to access your wallet without using malware, hackers frequently utilise this kind of software to access your accounts or personal data. Therefore, you should use the antivirus program that is installed on your device to perform a malware scan if you think that someone has gained access to your wallet.

You must exercise caution if it seems that your device contains malware. You should remove the malware using your antivirus program before moving any money to another device (since doing so while the malware is still present may spread it to that device).

Run a second scan once the malware has been eliminated to make sure no more harmful software is on your device.

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Transfer your funds

As soon as you are positive that your device is malware-free, you must transfer any remaining funds from the compromised wallet to an alternative wallet. If hackers haven’t already taken all of your money out of your account—which they usually do—now is the moment to act quickly.

Before moving money to another wallet you already own, it is advisable to check the transaction history of the current wallet to make sure no suspicious activity is taking place. Once you’ve determined that your other wallet is secure, transfer all of your funds over as soon as you can. If not, you can create another wallet.

Notify your wallet or exchange provider and the authorities

A wallet or exchange provider will likely upgrade the security of their service if they get a lot of complaints about wallets that have been compromised. Additionally, getting in contact could benefit you in more ways than you might imagine. Your wallet or exchange provider might offer a fund recovery scheme that will replace your stolen cryptocurrency.

Change your login details and use more security features

It isn’t advised to use password manager software to store login credentials for accounts that contain money or extremely sensitive data, even though it works great for storing login credentials for social media, shopping websites, and the like.

To further reduce the likelihood of another hack, make sure you’re utilising all security features that your new or alternate wallet offers. Given how crucial security is for cryptocurrency wallets, the provider you choose should have a number of features that can aid in protecting your money, including encrypted backups, multi-signature accounts, and two-factor authentication.

Additional security layers are vital for safeguarding your money from nefarious parties, even though they occasionally make using your wallet a little more time-consuming. Therefore, if you own a cryptocurrency wallet of any kind, make sure it has some practical security features and try to utilise them whenever you can. After all, no security precaution should be off-limits when it comes to your priceless cryptocurrency holdings.