What is 2Factor Authentication? (2FA)
Despite popular belief, the biggest threat that stands between you and your cryptocurrency investment portfolio is not its volatility, but the security of the funds you have. Although most of the smart learners today have moved across to hardware wallets such as the Ledger Nano S for securing cryptocurrencies, most of us rely on exchanges to keep our money safe.
It’s certainly not the best practice, yet that is usually the best course of action, as managing an individual wallet for each coin you have is highly impractical. Although the prospect of top crypto exchanges shutting down is a realistic threat, this is the least of your worries. What you should worry about is getting hacked due to your lack of security practices.
If you need more reasons for why this is the case, then read head. According to the site Chainalysis, cyber thieves have taken more than $225 million dollars ‘worth of Ethereum in 2017, using a website phishing attack. This means that criminals today need to do nothing more than to clone or poof a legitimate website to steal your details.
Also, Bloomberg has highlighted the fact that there is a 1 in 10 chance that you will get your money stolen whilst investing in an ICO.
All of this leads to one obvious conclusion: that there is a critical need for each person to be far more diligent whilst investing in cryptocurrencies and make cybersecurity an additional priority.
So how can we begin to do that? Let’s start with securing your account from intruders, which is where Two Factor Authentication (2FA) comes in. 2FA is one of the easiest and most powerful ways that you can secure your account. It takes minutes to setup, and while imperfect, it goes a very long way to keeping your coins secure.
Let’s quickly go over what 2FA is and how you can set it up on your computer.
What is Two Factor Authentication (2FA)?
As you could probably figure out already, 2FA adds an additional layer of security for your trading account. Unfortunately, the standard security methods used today with many applications are simply not up to standards, which means that your information can easily be taken away from you. In fact, it’s scary how easy it is now for cybercriminals to get their hands on your account’s information and password. In this case, 2FA helps to ward of criminals so that they cannot log in to your account, even if they know your password.
How Does 2FA Work?
How does 2FA do this? By ensuring that each login that is made to your account is made by only one person: you. Here are some factors that usually come bundled with your login credentials:
- Something you know: This could be a combination of passwords, PIN, or a ‘secret question’ that only you have the answer to.
- Something you have: This could be a code, USB dongle, or something sent to an email address that is under your control.
- Something you are: These are things that relate to your human body, such as a fingerprint, retinal scanner, or voice.
Example of 2FA
Two-factor authentication can be implemented in various ways. Let’s take a glance at an actual example to understand the concept. Afterwards, we will explain how you can use 2 factor authentication in your crypto portfolio to make your coins less likely to be hacked.
Traditional use of 2FA
Let’s say that you have a safe inside a bank where you save all your belongings. The bank dispenses the key for the lockers to their customers. However, to access the safe, two keys are required: one form the customers and another from the bank. This is the essence of two factor authentication.
Alternatively, your debt card and ATM pin are both examples of 2FA since you can’t use one without the other.
How Does 2FA Work?
Two factor authentication works in the same way as your existing login process. The only difference is that you need to enter an extra piece of information in concert with your ID and password.
This extra information can be transmitted to you through the means of a onetime password (OTP) that is posted to your mobile number or email address. This can take the form of a code on an application such as the Google Authenticator or Authy that you need to enter on the website’s login, along with your username and password.
Using your email account or SMS to verify your identity is not the safest way, as it leads your account to being compromised by hackers. It’s a fact that it’s easier to be hacked via social engineering using these methods, which can allow them to get access to your sim card. However, when we use a mobile application for making this token, it puts you in a place of complete control of your account’s security. If you have not used 2FA before, then you should start using it now. It’s simple to setup and it strengthens your account’s security.
Benefits of Two Factor Authentication (2FA)
Here are some popular reasons for why you should be using 2FA on your account right away.
2FA adds an additional layer of security to your trading account that is much needed. This means that even if your account were to be hacked by someone who has your username and password, they will need an additional piece of information to withdraw funds from your trading account. These hacks are not uncommon, and they will likely increase in frequency as cryptocurrencies become more popular.
So, since hackers are not likely to have access to your mobile phone or email address, this feature if what allows 2FA to be so attractive for users who want to increase the security of their trading accounts. This principle holds true even for brute force attacks, which is when a piece of software is used to guess your password by going through a countless number of guesses.
With an increased feeling of security, users and management do not need to organize a secure office environment to access sensitive information. This can be now be accessed while on the move with two factor authentication acting as a barrier for mobile tech.
Therefore, employees can now get access to company information such as data, documents, worksheets and more via any virtual device. All this today is now done without putting the safety of sensitive information in danger, as well as keeping it secure always.
For example, if an employee uses their personal tablet to log in to a company website, no other person can access the information after the session is over, since 2FA makes this impossible without access to the username and password.
Due to the threats of coordinated attacks from criminals, cybersecurity at the corporate level is a priority today. This has led companies to handle this matter urgently and adopt the best practices that they can to keep their data safe.
But the expenses associated with these security practices are high.
This is another benefit of 2FA, as it provides a simple and easy way for organizations to manage their security problems. This is especially true for small companies and startups who are constantly on the lookout to save time and money.
Customers Query Management
Another issue that companies face is the handling of customer questions relating to their logins. This usually takes the form of tickets and a helpdesk process, which takes up a lot of time for the company if it is not automated.
With two factor authentication, it is possible to take away this inefficiency by letting the user reset their own passwords through using a combination of their email and the authentication method they have chosen.
What’s more is that it can also stop hackers from taking advantage of the ‘Reset Password’ system to gain access to your account.
Stops Identity Theft
You can stand to lose a lot in case a hacker gets access of your account. Identity is one of the key first world crimes that we are facing today. The Identity Fraud Study that was conducted in 2017 revealed that $16 billion dollars was stolen from 15 million people in the United States alone.
These kinds of crimes are possible since once a hacker has control over your account, all the other accounts and sensitive information will also be available to them. For example, if your cryptocurrency account is hacked today, your linked banked account along with your KYC will also be up for grabs.
This means that 2FA could be your best option for protect against these attacks.
The most up to date way to secure your account using 2FA is using a hardware device such as YubiKey. However, most of us will use an application such as the Google authenticator or Authy to use 2FA when you use major exchanges such as Binance or Bittrex, you will be used an app-based 2FA method.
Before we go into details of how to use the Google authenticator for 2FA, let’s check how YubiKey measures up. Soon, you should plan to move your 2FA method to a more secure piece of hardware.
How to use Yubi Key
If you are ready to jump on board with 2FA and looking for an easy tool to help you do this, then YubiKey could be the solution that you have been looking for.
For starters, YubiKey is a hardware authentication dongle that is packed with a range of features such as one-time passwords, authenticators, encryption, and the 2nd Factor protocol
If the above information has been convincing enough and you are already looking for an effective tool to set up 2FA, one noteworthy mention here is YubiKey.
This means that it can function as a secondary authentication factor, or something that the user has that allows them to login securely to their accounts. OTP will give you a private and public key pair that is made by Yubi. Yet the best feature of Yubi is that it can be used with any website, even those that do not support OTP. This is facilitated through the help of static passwords.
The integrity of the device can be verified by the fact that both Facebook and Google use it.
And if you are on the hunt for a 2FA application, you can use either the Google authenticator or Authy.
Both tools work through the inclusion of a random string of numbers for accounts for website where you can use 2FA to interface between them. This adds some much-needed swiftness to the whole process for easy logins.
Authy differs quite a bit from the Google Authenticator in several ways. First, Authy requires your phone number as well as your email address. Your phone number is used to send a verification pin that is needed when setting up your account. Second, Authy provides multi-device support, while Google does not.
This is important, as what would happen if your device was stolen and you had all your 2FA information set up through the Authenticator application? There would be no way to get that information back.
So, with Authy, you can take away all the 2FA credentials from your lost or stolen devices and authorize a new device for each of your accounts. Also, the application is available for all devices, not only mobile phones.
Despite these advantages, most people use the Google Authenticator as it is made by Google and its security is one of the best in the industry. You can even use the Google Authenticator to verify your logins with the most popular crypto exchanges, which is something that we will go into detail with in another guide.
Two-Factor Authentication Security Summary
To put it simply, this is how you can set up 2FA on your exchange accounts to add an additional layer of security for your logins. It would be foolish to overlook the security of your account in today’s world of cybercrime and major hacks.
Remember that are at any point in time, you alone are responsible for your own security, and you will only have yourself to blame if something goes wrong!