One of the best ways traders can reduce crypto bot vulnerabilities is to use licensed and reputable crypto trading bots that use top security measures.
A shocking $2 billion in crypto was stolen in 2020 by criminals, according to the reveals made by Finaria. However, one of the fortunate things about crypto is that despite the expansion of the market, crimes surrounding cryptocurrency have plunged by 57% since 2019. The widespread implementation of robust and advanced security measures has prohibited crypto criminals from illegal activities. In 2023, crypto trading bots have become extremely popular in the digital world that automatically trades on crypto exchanges on behalf of human traders. This requires strengthening cybersecurity while using the top crypto trading bots to protect trading accounts and funds from potential hackers.
This article will discuss a few ways to protect crypto trading bots from hackers and how to avoid shady platforms offering such crypto trading bots.
Ways to Protect Crypto Trading Bots from Hackers
In crypto, a digital wallet’s private key is essentially the money. Anyone accessing the private key effectively can access the funds in the wallet. The same applies to crypto trading bots; anyone with access to crypto trading bots can easily access crypto trades and, therefore, the funds in the trading account. Traders must take precautions to secure their crypto trading bots and accounts.
API Security:- While bots use a PC interface to execute trades, accessing the Application Program Interface (API) key gives direct access to specific trades that allow them to act quickly. API keys are passwords the trading bots require to operate, make crypto orders, and use the trading account. Most crypto exchanges will require traders to make API keys which must be kept secret from others. Anyone who gets access to a trader’s API key will also get to make trades on their behalf. Traders can enhance their security levels by deleting the API keys if they stop using crypto trading bots.
Use Reliable and Secure Trading Bots:- Before jumping onto any crypto exchange, traders must thoroughly research the different trading bots available on the market to ensure that their chosen bot is secure and reliable. Using trade bots with inadequately coded algorithms or bad software can potentially bring losses. In addition, the chosen bots should be able to function smoothly even if it stops working or goes offline.
Read customer reviews and feedback about different bots available to determine their efficiency and reputation. Many best crypto trading bots use robust security measures to protect client data. Every trader is provided with a private key that has bank-level encryption, stored on servers located in segregated data storage for tight security.
Use Multi-factor Authentication:- Using 2FA or two-factor authentication is an important step that gives traders an additional layer of security to shield against potential attacks from hackers. While logging into a crypto exchange with a username or password, 2FA requires users to enter an OTP (one-time password) promptly sent to the user’s device to complete the login process. This OTP is either time-based or HMAC-based.
OTPs that are HMAC-based are valid for more extended periods, while time-based OTPs are valid only for 30 to 60 seconds. The latter is a more secure option. Multi-factor or two-factor authentication is a great solution to protect trading bots from hackers. Many dedicated authenticated apps, such as Authy or Google Authenticator, provide multi-factor authentication protocols.
Protect Private Keys With Cold Storage:- The public keys operate like an address that others use to transfer funds to a trading account, whereas traders use private keys to send money to others. It is essential to keep private keys away from unwanted prying eyes. One way to achieve this is by using cold storage. Private keys can be stored with cold storage, which involves physically noting down the keys on paper or locking them away in a deposit or a safe box and then erasing every digital trace.
Using Hardware Wallet:- A hardware wallet involves a similar tactic to cold storage. They are devices where cryptocurrencies can be transferred and kept offline, similar to how cash is withdrawn from the ATM and kept in a traditional physical wallet. One great benefit of doing this is keeping the balance off-line and secure from others. However, as with any conventional wallet, theft is not impossible, and if the wallet is lost, the funds will also be easily irretrievable.
Cyber security in the crypto world has become a top priority as viruses and hackers threaten to destroy client information, potentially steal identities, and take down essential systems. Many malicious crypto trading bots create significant damage, often underestimated as they are not generally considered a primary threat to the server or system. However, these crypto trading bots can have havoc if left unchecked by slowing down overall productivity and stealing information from the traders.
The best crypto trading bots are used to execute trades on behalf of human traders. They are programmed to buy or sell crypto assets without having any human emotions. These are robots that keep operating even if the market crashes. Moreover, they are also easily targeted by hackers and fraudsters. A few simple steps can help traders create a safe and secure trading environment by protecting the bots, thereby shielding the client funds and trading accounts from criminals.