When it comes to trading Bitcoin one has to sign up at an exchange first to enjoy this potential profitable game. Most cryptocurrency exchanges are centralized platforms which offer crypto wallets to store your crypto. As a result of this policy, the exchange also has to take care of the private keys which belongs to the online wallets. Furthermore, by handing over security measures to the exchange comes with a potential risk. When a hacker gets access to the private keys of the crypto wallets all the Bitcoins are lost forever. After such an event, you are dependent on the crypto exchange in the way they can cover your losses. In this article, I’ll discuss the best way to secure your account(with YubiKey) and trade Bitcoin safe in the most possible way.
How to trade Bitcoin safe
To start trading Bitcoin safe, most serious cryptocurrency exchanges offer several methods to secure your account. The most common way to do so is securing your account with a valid email address and strong password. Moreover, when signing in exchanges protect themselves from bots by letting the user solve an easy puzzle or entering some characters shown on a picture.
Securing your trading account with an e-mail and strong password only is mostly not enough and it’s very wise to take some extra security measures to protect your account. The common way to do this is to add an extra layer of security which is called 2FA authentication.
What is 2FA Authentication
2FA authentication is a security method where you have to go through two steps when getting access to a certain online platform. The first step is give an e-mail or username combined with password as described above. The second step could be various ways, but most cryptocurrency exchanges use SMS-verification or Google Authenticator.
Both authentication methods ask you to enter a code from a separate device(mobile phone) and adds more security to your account.
Is 2FA Authentication Safe Enough
In my opinion, using 2FA authentication when trading Bitcoin on an exchange is in most cases enough, but still very poor. When applying to this method it’s true that you reduce the risk of getting hacked and losing your ‘mighty’ Bitcoins or other crypto.
But there are also disadvantages when it comes by using your phone as a security device. One of the biggest disadvantages is that most people carry their phones everywhere these days. As a result, this increases the possibility of losing your device or getting stolen. In other words, carrying your phone everywhere could hurt the security of your trading account.
This is still a big risk.
One of the best ways to avoid this to happen is to use U2F authentication or Universal 2nd factor authentication.
What is U2F Authentication
U2F is an open authentication standard that enables internet users to securely access any number of online services with one single security key instantly and with no drivers or client software needed. FIDO2 is the latest generation of the U2F protocol.
In other words, no software or installation of an app is needed, you just use a hardware device(USB key) to handle the authentication. This way you can trade Bitcoin in a very safe way!
How does this USB key work
To handle your security in the safest way, several cryptocurrency exchanges offer authentication by YubiKey. YubiKey is a hardware solution in the form of a simple USB drive.
What is YubiKey and How does it work
YubiKey by Yubico, a Silicon Valley headquartered company, is a U2F device which aims to strengthen and simplify two-factor authentication (2FA) process.
It utilizes FIDO2, WebAuthn, and FIDO Universal 2nd Factor open authentication standards, as well as USB-A, USB-C, and NFC technologies.
A physical key is deemed to be the most secure 2FA method. Solutions by Yubico are deployed by some of the biggest tech companies including Google, Facebook, GitHub, Salesforce, Dropbox, as well as the governments of the United Kingdom and Turkey.
According to KrebsonSecurity, there were no reported or confirmed employer account takeovers since implementing the security keys at Google.
The keys work the following way: when logging in into your account, you are prompted to insert the encrypted hardware key into your computer. You just tap the device and are ready to go. Easy and quick.
YubiKey can also be used with mobile devices when activating Bluetooth.
Advantages of YubiKey
Strong two-factor authentication using public key crypto that protects against phishing, session hijacking, man-in-the-middle, and malware attacks.
Easy to use
Just ‘plug and play’, thanks to native support in platforms and browsers. Moreover browsers like Chrome, Opera, and Mozilla are enabling instant authentication to any number of services. No codes to type or drivers to install.
Allows users to choose, own, and control their online identity. Each user can also opt to have multiple identities, including anonymous, with no personal information associated with the identity. A U2F Security Key generates a new pair of keys for every service, and only the service stores the public key. With this approach, no secrets are shared between service providers, and an affordable U2F Security Key can support any number of services.
Open standards provide flexibility and product choice. As a result, YubiKey works with existing phones and computers, for many authentication modalities, and with different communication methods (USB and NFC).
Users can choose from a range of affordable devices online. YubiKey offers free and open source server software for back-end integration through the Yubico Developer Program.
Identity proofing is offered for organizations requiring a higher level of identity assurance. Through service providers it is possible to bind your U2F Security Key to your real government issued identity.
Which Cryptocurrency Exchanges work with YubiKey
Back in May 2019, Binance was hacked and had to suffer a loss of 7000 Bitcoins. As a result, they upgraded security by adding U2F authentication. Also, the CEO of Twitter, Jack Dorsey, was recently a victim of a SIM hack.
Binance is not the first exchange to implement U2F authentication. Exchanges like Bitfinex, Kraken, Coinbase and Bitmex have already implemented hardware 2FA verification options. Meanwhile, other security-minded crypto exchanges might implement the U2F authentication option in the future as the circle of unhacked cryptocurrency exchanges is shrinking.
Finally, some motivating words: stay #SAFU and happy Bitcoin trading!
Disclosure: This post contains affiliate links. This means I may make a small commission if you make a purchase. This doesn’t cost you any more but it does help me to continue publishing cool and actual content about Bitcoin & Crypto – Thank you for your support!
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