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Tether Hacked: How to protect your digital asset

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Yesterday, Tether reported that $30,950,000 USDT was stolen from its treasury wallet and sent to unauthorized digital wallets. They suspended the backend wallet services and marked the affected coins in order to trace their circulation.

This is not the first time we have heard about hacker attacks. There are two other crypto currency hacks that are worth mentioning. They are the roughly $66 million Bitfinex theft of the past year as well as the $350 million MT Gox lost in early 2014.

These hacker attacks brought up an important question: how can you protect your digital asset?

When you invest in crypto currencies the funds are stored in wallets. There are two categories of wallets: hot wallet which is connected to the Internet and therefore vulnerable to hacker attacks, and cold wallets that are offline devices.

Accounts held at the exchanges such as Bittrex for instances are hot wallets because the exchange holds your funds in its own server which makes it susceptible to hacking.

Another type of wallet is a web-based software such as Coinbase. Even this type of wallet is vulnerable to hacker attacks and can be considered a hot wallet. A better alternative could be a software desktop wallet that is downloaded to your computer and can be vulnerable to hacker attacks only if your computer is compromised.

In my opinion, the safest type of wallets are hardware wallets. They are offline physical devices that may be connected to your computer. Since they require a pin number to confirm each transaction and this pin number is inputted in the physical device and not in the computer, they are safe even if connected to a compromised computer. Hardware wallets are not connected to the internet and because of that they are considered cold wallets. Their downside is that they are expensive when compared to the other wallets. The most popular are Trezor, Ledger, KeepKey, Opendime and Digital Bitbox


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About the author

Vittoria Onufrio is a senior broker at Halifax America and has been working in the Industry since 2010. Before that she worked as an attorney for 3 years in Palermo. 

She received her JD and Ph.D. in Comparative law from University of Palermo and two master's degrees. One in European law from University of Trento and the second master's degree in Intellectual Property law from Suffolk University. In 2014 she concluded her post-doctoral studies at UCLA - Center for the Study of Women.

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