Germany’s Federal Office for Information Security (BSI) has urged crypto users to store their funds in hardware wallets. The BSI said that hardware wallets are the best for storing digital assets because they store private cryptographic keys in a device not connected to the internet. This recommendation comes after a sharp increase in crypto crimes and cyber threats in 2024.
Hardware Wallets Deemed Safest by BSI for Crypto
The BSI stressed the use of hardware wallets to protect digital assets. This approach does not involve online wallets or exchanges since the private keys are stored in ‘cold storage’ that is not connected to the Internet until the time of a transaction. This approach minimises the likelihood of cyber threats and unlawful intrusions into the system.
The office pointed out that keeping your crypt assets on an exchange or any other third-party service exposes them to hacking. However, exchange-based custody has disadvantages, as it presents the assets with numerous risks, including hacking and internal fraud. On the other hand, hardware wallets are more secure since even if the device is lost or stolen, the keys will not be at risk.
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Alongside exchange risk, the BSI also explained the dangers posed by self-custody wallets on personal digital devices. Despite appearing safe to store the keys on phones or computers, the keys can be at risk of malware and other security threats. Such devices can be hacked by phishing for passwords through malware or other software vulnerabilities or by physically accessing the device.
The BSI stated that self-custody benefits from providing total control of the assets; however, it comes with risks. Hardware wallets that are protected by PIN or offer opportunities for safe storage of backup are safer. They reduce the likelihood of losing access to digital assets due to device failure or attack by hackers.
BSI Advises Hardware Wallets as Crypto Crimes Rise
The BSI’s advisory was released in response to a rising number of thefts and cybercrimes involving cryptocurrencies. According to Chainalysis’s data, the crypto market suffered a loss of approximately $1.6 billion due to hacking and exploitations in the opening half of 2024. The average value per incident was also on the rise, which can unarguably be attributed to the increased value of virtual goods and services.
Scam Sniffer detected a rise in crypto-related phishing attacks, which caused losses of $341 million in the first half of the year. Of the attacks, the top 20 victims alone received $58 million, which shows the extent of the damages caused. To this end, the BSI advises people to alleviate such risks and avoid losing large sums of money using hardware wallets.
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