German Federal Authority Issues a Warning to Crypto Users

Germany's Federal Office for Information Security (BSI) has advised cryptocurrency users to protect their digital assets using hardware wallets.

In a LinkedIn post, the BSI said hardware wallets are the most secure method of storing cryptocurrencies as they store private cryptographic keys in offline or “cold” storage, minimising the risk of hacking attacks.

The agency highlighted the vulnerability of storing assets on third-party platforms such as exchanges, which, while convenient, are susceptible to hacking attacks. Similarly, self-custody wallets in phones or PCs also pose a significant security risk.

This consultation comes in response to the growing threat of cryptocurrency theft. Analyst firm Chainalysis reported that in the first half of 2024, nearly $1.6 billion was lost to cryptocurrency hacking attacks, with the average amount stolen per incident up 80% from the previous year.

Additionally, phishing attacks targeting individual crypto users have increased sharply, with losses reaching $341 million, surpassing the total amount stolen in 2023.

BSI’s recommendation highlights the growing importance of robust security measures in the face of escalating cyber threats in the crypto space.