How To Create Crypto Wallet App More Secure
This blog delves into essential security mechanisms businesses should contemplate before creating a cryptocurrency wallet.
Two-factor authentication
Two-factor authentication, commonly abbreviated as 2FA, involves receiving a text code on one's phone or using a thumbprint to verify the user's identity. It is an additional layer of security that guarantees only authorized individuals can gain entry to the wallet.
Even if an unauthorized person successfully breaks the password using any means, they would still need to bypass the second-tier authentication. This usually involves entering a code sent to the user's phone in a sign-in field to access the wallet.
Multi-sign or single-use?
Typically, a single-key address grants access to all funds to whoever possesses the corresponding private key. This means that the user only needs a single key to sign transactions without requiring authorization from any other parties. Although managing a single-key address is more efficient than a multi-sig address, it poses certain security challenges. Having a single key access creates a single point of failure to safeguard the funds, making it a prime target for cybercriminals who continually develop new phishing techniques to gain unauthorized access.
Moreover, a single-key address is not a suitable option for medium to large businesses that rely on cryptocurrencies. For instance, if a company stores funds on a standard address with a single corresponding private key, the private key must either be entrusted to a single individual or assigned to multiple entities.
On the other hand, multi-sig wallets provide a solution to overcome both challenges. With a multi-sig address, a user can only transfer funds after obtaining multiple signatures from designated entities.
Wallet encryption
Adding an additional layer of security by encrypting the wallet with security measures such as AES-256-CBC and securing it with a passphrase is highly recommended. This method protects the wallet from being accessed without authorization. In case attackers gain access to the device containing the wallet, they will not be able to perform any actions unless they have access to the passphrase.
However, some cryptocurrency wallet developers opt not to use this method due to certain drawbacks. Encryption and decryption for every transaction can significantly increase processing time, leading to increased costs and service disruptions.
DDoS Attacks
A Distributed Denial-of-Service (DDoS) attack is a method used by hackers to disrupt legitimate users' access to a target network or web resource by overloading it with a huge amount of traffic or disseminating malicious requests. Cryptocurrency exchanges and wallets have become increasingly popular targets for DDoS attacks, making it essential for crypto wallet development companies to implement DDoS mitigation systems like anti-DDoS hardware and software modules.
These systems come in the form of load balancers, network firewalls, or specialized web applications that can prevent malicious access requests and sudden surges in traffic, effectively preventing DDoS attacks.
Security Alerts
To ensure that no important information is missed, cryptocurrency wallet providers can configure multiple alerts for withdrawals and deposits from a wallet. These alerts can include:
Notification for the first deposit to a new wallet.
Notification for the first withdrawal from a new wallet.
Notification for any withdrawal that deviates by a certain percentage from the previous withdrawals.
Notification for any withdrawal of the same value from the same wallet for a certain number of consecutive days.
Notification for any withdrawal from a new IP device.
Notification for any mobile number change request before a withdrawal.
Notification for any password change request before a withdrawal.
Notification for any second withdrawal for the day.
In addition to these, wallet providers can configure other necessary triggers based on their specific business requirements. These alerts help to monitor the wallet and detect any suspicious activity, allowing for quick action to be taken to prevent potential fraud or theft.
Phishing Attacks
Yes, that's correct. Anti-phishing software can help protect cryptocurrency wallets from phishing attacks by identifying and blocking any phishing content that may be used to access wallet data. This software typically works by analyzing website URLs, emails, and other online content to identify potential phishing attacks, and then alerting users or blocking access to those sites.
It can also display the real domain name for the website that a user is accessing, which can help prevent fraudulent websites from masquerading as legitimate ones. By using anti-phishing software, crypto wallet users can reduce the risk of their private and public keys being stolen through phishing attacks.
Notification of Critical Activities
Yes, activating notifications for critical activities such as logins, transactions, trades, and profile and KYC status updates is an important security measure for cryptocurrency wallets. This allows network administrators to monitor the activity on the wallet and identify any suspicious or fraudulent behavior in real-time.
This is particularly important for multi-signature wallets, where multiple parties are involved in managing the wallet, and any unauthorized activity can have significant consequences. By activating notifications, network administrators can quickly respond to any suspicious activity and take appropriate action to secure the wallet.
Concluding Thoughts
As an AI language model, I'm not affiliated with any company, including blockchain development companies. However, I can suggest that if you are interested in exploring cryptocurrency wallet development services that include security mechanisms, you can do research on various blockchain development companies and their offerings. It's important to thoroughly evaluate the reputation, experience, and expertise of the company before making any commitments. Additionally, you can review the security measures they implement in their cryptocurrency wallets to ensure that they meet your security requirements.
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