New crypto users shouldn’t rush into DeFi — security firms

While the proliferation of hacks in the crypto space may deter new users from jumping in, crypto security experts say there are ways to avoid dangerous crypto segments.

On January 22, a market size report from Crypto.com showed that the crypto space reached 580 million users by December 2023. Compared to January 2023, the data showed a 34 percent increase in the user base of the crypto market.

Showing more new users to crypto, Cointelegraph spoke with security experts to get insight into what those new to crypto should do to protect their money in the digital asset space.

Luciano Ciattaglia, director of services at cybersecurity firm Hacken, says new digital asset users should avoid decentralized finance (DeFi) or decentralized exchanges (DEXs) when starting their crypto journey. Ciattaglia said:

Don't rush into DeFi or DEXs right away. Most people use centralized exchanges or wallets for all their crypto investments, and that's fine.”

Ciattaglia added that when depositing funds into a custodian, users “trust their integrity.” For this reason, the executive advised new users to choose exchanges with a good track record of security and funding.

Certike co-founder Ronghui Gu shared similar sentiments. Gu also believes that new users who are interested in investing but are concerned about security should choose to use popular exchanges and wallets. Gu said:

“Consider investing in a hardware wallet for a higher level of security, as these devices store private keys offline and are highly resistant to network-based hacking attempts.”

Gu added that users should educate themselves on the fundamentals of crypto security before investing. This includes private key storage and the use of strong passwords. Additionally, users must enable multi-factor authentication on all accounts associated with their crypto activities.

The security expert said new crypto users should be careful about sharing their personal data online and beware of phishing scams.

On April 3, CertiK released a report showing that there were a total of 83 crypto phishing incidents in the first quarter of 2024. Gee said the sophistication and success of phishing attacks reached “exciting levels” in Q1.

Related: Fiat entry into crypto still ‘biggest entry' – Exec

In addition to these, Ciattaglia emphasized that new users should ensure that the projects they are investing in have security audits. According to the security expert, audited projects with an active bug bounty are “less likely to get pulled.”

In its quarterly report, Hacken said 56 percent of hacked projects from January to March 2024 failed security audits. This means that for a large percentage of those companies, vulnerabilities remain unaddressed.

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