Category: Crypto Hardware Wallets

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Crypto Hardware Wallets

Where to Safely Store Your Bitcoins & Alt Coins

Protecting your digital currency is arguably one of the most important aspects of investing in the cryptocurrency market. While cryptocurrencies may offer a wide range of advantages over traditional fiat currencies (such as the Australian Dollar), they are far more susceptible to hacking attacks and require a careful approach to storage. 

If you’re already investing in Bitcoin or another cryptocurrency, then it’s likely that you already own at least one crypto wallet, which is where you store Bitcoin and cryptocurrency. Wallets basically consist of two elements — a private key and a public address. Your public address is used to receive cryptocurrency, while your private key is used to access your wallet and send cryptos. 

It’s essential to keep your private key highly secure, as it provides access to all of the cryptocurrency in your wallet. Should your private key fall into the wrong hands it’s likely that your wallet will be emptied with no chance of recovering the lost funds. 

There are many different types of crypto wallets used today. The most commonly used type of crypto and Bitcoin wallet is a hosted, or “hot ” wallet. These solutions are typically provided by exchange platforms or cryptocurrency brokers and are far less secure than “ cold ” wallets — their offline counterparts. 

The biggest security issue presented by hosted wallets is the potential of a hacking attack against the platform that provides it. The Mt. Gox hack, which occurred over several years, resulted in the loss of more than $460 million worth of bitcoin. Another popular exchange, still active also experienced a Bitfinex hack in 2016 that resulted in the loss of $75 million worth of Bitcoin — although users were eventually compensated. 

The most secure method of storing your cryptocurrency is with a cold wallet, which is not connected to the internet. Hardware wallets are dedicated devices that contain a cold wallet and add a variety of strong security measures. There are, however, a number of hosted “hot” wallet solutions that offer greater security than the average exchange wallet (explained below in the Hot Wallets section). 

In this article, we’ll take a look at the most secure wallet solutions available and break down their key features to help you determine the safest way to store cryptocurrency. 

Check out our Top 10 Crypto Hardware Wallets. 

Cold Wallets 

A cold storage wallet is a highly secure offline wallet that keeps your cryptocurrency holdings disconnected from the internet. There are physical wallets typically found in the form of “hardware wallets”, which are purpose-built devices similar in size to a USB drive. 

It’s important to note that you should only ever purchase a hardware wallet form the manufacturer to eliminate the threat of tampering. Never purchase a hardware wallet secondhand or from Ebay. See news article: Man’s Life Savings Stolen from eBay Reseller Hardware Wallet. 

Trezor 

Price: ~89€ ($136 AUD) 

> Click here to visit the Official Trezor website. 

The Trezor was the first Bitcoin hardware wallet to hit the market and is largely considered to be the “gold standard” of cryptocurrency cold storage security. The Trezor connects to any computer via a USB cable and offers users multiple layers of security that virtually eliminate the threat of a third party gaining access to your private keys. 

Each Trezor is protected by a PIN code and adds another layer of security by requiring users to press a physical button on the device itself to confirm transactions. If a device is lost or misplaced, Trezor provides users with a randomly-generated 24-word “recovery seed” that can be used to recover the wallet it contains and the funds therein. 

The Trezor can also be secured with two-factor authentication and supports Bitcoin, Dash, Litecoin, and all ERC20 tokens. The device also boasts a convenient OLED screen that can be used to confirm transaction amounts. 

Importantly, the Trezor offers extremely high privacy levels. None of the Trezor hardware wallets possesses serial numbers, which means Satoshi Labs — the creator of the Trezor — has no way of tracking your actions. The Trezor can be used with a variety of software wallets, including Electrum, MyCelium, and MultiBit HD. 

Ledger Nano X 

Price: ~79€ ($120 AUD) 

> Click here to visit the Official Ledger Nano S website. 

The Ledger Nano S is the cheapest hardware wallet with a screen on the market and is the most popular option. Offering a simple and easy setup with any computer, the Nano S comes with a range of security features that are similar to those offered by the Trezor. 

Like the Trezor, the Ledger Nano S offers physical buttons, which add an extra security layer, and the option of two-factor authentication. The Nano S also requires PIN code confirmation for any transaction — after three incorrect attempts, the device wipes itself. 

This complete device wipe doesn’t result in the complete loss of your wallet, fortunately — the Ledger Nano S offers the same 24-word recovery phrase feature as the Trezor. Although these two devices seem virtually identical, the difference can be found in the architecture of the devices themselves. 

The Trezor can be considered to be a “mini computer”, while the Ledger Nano S consists of two secure chips. It’s also possible to set up a Ledger Nano S without a computer, which makes it a better option for highly security-minded individuals. 

Paper Wallet 

Price: Free (just the cost of paper to print it out) 

The idea of a paper wallet may sound strange, but with this technique, it’s entirely possible to store billions of dollars in cryptocurrency on a single piece of paper. A cryptocurrency wallet, as mentioned previously, consists of a private key and a public key. A paper wallet is simply these two keys printed out on a piece of paper. 

Paper wallets typically include QR codes in order to streamline the process of either receiving crypto or adding keys into a software wallet to make transactions. The obvious advantage of a paper wallet is that it is completely immune to hacking, hardware failures, or any other digital attack vector. 

While paper wallets are essentially unhackable, they are subject to the same risks as any other high-value paper document. Paper degrades, can be destroyed, or can be misplaced. If you’re considering creating a paper wallet, it’s essential to treat it with the same level of security as you would any other high-value asset. If you lose a paper wallet, you’ll never be able to access the cryptocurrency it holds ever again. 

If you’re interested in creating your own Bitcoin paper wallet, BitcoinPaperWallet.com makes the process relatively easy. 

USB Sticks 

Do not use regular USB sticks to store your Cryptocurrency. The regular USB sticks offer no security, they usually have a short lifespan and are prone to the occasional corrupt drive syndrome. 

Hot Wallets 

While it’s best to keep the majority of your cryptocurrency holdings secured on a hardware wallet or another cold wallet solution, there are a number of hot wallet solutions that provide greater security than others. 

When assessing a hot wallet solution it’s important to assess the way in which the platform handles user funds, the authentication and security options available to users, and the security track record of the platform. 

There is some contention in the cryptocurrency community as to whether software wallets — which are downloaded and installed on a computer — are defined as hot crypto wallets. While software wallets can be disconnected from the internet, they can still be attacked if a hacker gains access to your machine. 

Software wallets are far more secure than hosted wallets but are still technically “hot” wallets. 

Exodus 

Price: Free (they make a small fee when you trade coins using the software) 

> Click here to visit the Official Exodus website. 

Exodus is a software wallet solution that offers a robust, sleek design and a large feature set that has made it one of the most popular hot wallets available. Functioning as a desktop software wallet, Exodus supports a broad spectrum of cryptocurrencies and, importantly, integrates with the ShapeShift.io instant cryptocurrency exchange platform. 

Exodus is a “lite wallet”, which means it’s far more agile than software solutions that require users to download the entire blockchain onto their computer or mobile device. The Exodus solution leaves private keys in the hands of users but is only as secure as the computer it is installed on. 

The Exodus wallet also offers users a range of different analysis tools that can be used to organize assets, as well as track asset value in real-time with live market updates. As a bonus feature, Exodus also makes it possible to customize the look and feel of the wallet with a variety of different themes. 

Eden 

Price: Free (they make a small fee when you trade coins using the software) 

> Click here to visit the Official Eden website. 

Eden is the highly advanced evil twin of Exodus which delivers a powerful set of tools designed specifically for professional cryptocurrency investors and traders. It is important to note that while Exodus is stable and has really good support, Eden is delivered as unsupported & experimental. Exodus makes it clear that the Eden solution is not for beginners, even going so far as to recommend that users don’t recommend it to their “noob friends” as they will likely “get stuck doing tech-support for them”. 

At this point in time, the Eden solution is experimental and thus may cause issues with wallet balances, so it’s probably best to avoid using it to manage large sums of cryptocurrency. If you’re looking for a digital wallet solution that delivers all of the functionality of Exodus along with support for Bitcoin Cash, Factom, Ethereum Classic, Ripple, and more, however, Eden is worth trying out. 

Although Eden has more than 20+ coins available, if you can’t find what you’re looking for then we recommend using an Exchange such as Swyftx where you can buy and trade hundreds of coins. 

Final Thoughts 

Most professional cryptocurrency traders and investors lock away the greater part of their cryptocurrency capital in a hardware wallet solution, transferring it to a hosted wallet or exchange when trading. Regardless of the amount of capital you’ve invested in the cryptocurrency market, it’s essential to ensure your crypto holdings are secure with a dedicated cold wallet. 

Categories
Crypto Hardware Wallets Crypto News DeFi Ledger NFTs

Ledger Launches NFT-Focused Hardware Wallet ‘Nano S Plus’

A new hardware wallet released by Ledger this week promises to let people securely explore more of Web3 by offering management tools for NFT collections and space to install up to 100 apps.  

The Nano S Plus improves on the popular Nano S – released five years ago – by adding a larger screen that makes it easier to make transactions as well as more memory, enabling the installation of up to 100 apps to manage over 5,500 digital assets:

Ledger flagged its intention to become a gateway for the broader digital asset ecosystem in June last year when it announced a US$380 million fundraising round. 

A Secure Wallet Designed to be DeFi and NFT-Friendly

Ledger said the new wallet provides offline security for investors’ crypto as well as the convenience to securely manage a range of other digital assets. 

By pairing the wallet with Ledger’s digital asset management app, Ledger Live, users can display and manage their NFTs with their private keys, including securely sending and signing NFT transactions. 

The Ledger Nano S Plus is a Nano S on steroids. It provides you with more space to freely enjoy the ever-expanding world of DeFi and NFTs. We keep improving our world-leading hardware devices to allow you to securely explore the Web3 ecosystem.

Pascal Gauthier, Ledger chairman and CEO

Nano S Plus is compatible with Desktop and Android Mobile with a USB cable, has a 128 x 64 pixel screen, a storage size of 1.5MB, and costs A$129. 

Ledger has sold more than 3 million Nano S devices around the world. All signs point to Nano S Plus being in strong demand too – a limited-edition release of the wallet in March sold out 10,000 units in one day.

This is despite issues that call into question Ledger’s security, such as data breaches in June last year that resulted in sophisticated fake hardware wallets being sent to exposed customers’ addresses.

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Crypto Exchange Crypto Hardware Wallets Crypto News Crypto Wallets Cryptocurrency Law Europe Regulation

EU Parliament Votes in Favour of KYC for Private Crypto Wallets

European Union lawmakers have voted in favour of controversial proposals that require exchanges to collect personal data from individuals who transact more than EUR 1,000 using unhosted wallets.

Bad News for Exchanges

The proposals were passed, albeit narrowly, and purport to effectively prohibit anonymous crypto transactions:

The underlying justification behind the proposals is that they intend to extend anti-money laundering (AML) requirements that apply to conventional payments over EUR 1,000 to the crypto sector. As Coinbase CEO Brian Armstrong noted, however, the burden imposed on exchanges would be extremely onerous:

Most of the pushback from industry is because non-custodial wallets aren’t necessarily customers, with commentators describing the measures as “anti-innovation and anti-privacy”.

Referring to Chainalysis data showing that less than 0.05 percent of crypto volume was related to crime, hardware wallet provider Ledger argued that the proposals were neither necessary nor proportionate. It further noted that they reduced financial freedom, consumer protection and financial inclusion, and put Europe at a competitive disadvantage relative to other jurisdictions.

Image
Proposals’ unintended consequences. Source: Ledger

While some noted that users would simply resort to decentralised exchanges or send EUR 999 at a time, others had a more humorous perspective:

Turning Up the Regulatory Heat

This year has already shown that European lawmakers are increasingly scrutinising the digital asset sector. A few weeks ago, the EU Parliament finally decided not to ban proof-of-work cryptocurrencies (effectively Bitcoin), after going back and forth on the matter.

The next battle is clearly over unhosted wallets and for now it appears as if the regulators are in the driving seat. Importantly, the laws have not been enacted and still need to go through tripartite meetings between the EU Parliament, European Commission, and European Council.

Despite expectations that little will derail the proposals in question, if there is one thing we know about the crypto sector it’s that it will never go down without a fight.

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Bitcoin Crypto Hardware Wallets Crypto News Crypto Wallets Hackers Theta

Hacker Helps Recover $2 Million in THETA from Trezor Wallet

Hacks don’t typically have a happy ending. Fortunately, for one New York-based crypto investor who forgot the PIN to his Trezor One hardwallet, a hacker was able to help him recover over US$2 million in THETA.

The Story

In 2018, Dan Reich and his friend Jesse decided to make a concentrated bet on a new crypto. They both cashed out around US$25,000 in BTC and and bought US$50,000 in THETA at a time when it was trading at just 21 cents.

Jesse was going to custody the THETA and things were going swimmingly, until word spread of China cracking down on exchanges. This prompted them to transfer their THETA to a safer alternative, a Trezor One hardware wallet.

Dan Reich (right) with his friend Jesse. Source: Danreich.com

Then came the infamous crypto winter, which saw their investment annihilated. Dan wanted out but Jesse had forgotten the PIN to the Trezor One, which would self-destruct if they guessed the PIN incorrectly too many times. He had also somehow misplaced the piece of paper with the 24-word seed phrase that could have otherwise restored his wallet.

After writing off the investment, the pair then watched their investment recover and soar, eventually to over US$1 million and, at one point, touching US$3 million. After contacting a range of international experts, they settled on a reputable hacker, Joe “Kingpin” Grand, who claimed he could assist.

Kingpin to the Rescue

Kingpin spent the better part of 12 weeks trying to hack the Trezor One and, remarkably, found a way to recover the lost PIN.

Kingpin’s Trezor One hack circuit. Source: Danreich.com

According to Grand, the key to his success related to the hardware wallet’s firmware update that temporarily moved the PIN and key to RAM, only to later move them back to flash once the firmware was installed. For the particular firmware on Reich’s wallet, the information about the PIN was stored in flash.

After using a technique altering the voltage of the chip, known as a “fault injection attack”, Grand surpassed the security of the microcontrollers and obtained the PIN needed to access the wallet and the funds. Grand explained:

We are basically causing misbehaviour on the silicon chip inside the device in order to defeat security. And what ended up happening is that I was sitting here watching the computer screen and saw that I was able to defeat the security, the private information, the recovery seed, and the pin that I was going after popped up on the screen.

Joe “Kingpin” Grand, hacker

No doubt proud of his effort, Kingpin later created a video in which he provided a full account of how he managed the feat:

For its part, Trezor expressed relief for Grand having been able to access the funds but noted that the vulnerability identified had already been fixed:

What’s the lesson here? Remember your 4-digit PIN (make it hard to forget), write down your seed phrase and put it somewhere safe, and also keep your hardware’s firmware updated. If you happen to be one of those unfortunate souls who have lost their crypto, it could be worse – you could be the guy who is still looking for his 7,500 BTC.

For Australians keen to up their crypto security game, Crypto News Australia recommends Coinstop as its preferred hardware wallet provider. Users can get A$5 off their order with the code CRYPTONEWS.

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Coinstop Crypto Hardware Wallets Press Release

Coinstop Introduces the Ledger Nano S Color Edition

Australia’s leading hardware wallet provider, Coinstop, has recently added the Ledger Nano S Color Edition to its Australian-based online store. 

The Ledger Nano S is a Bitcoin, Ethereum and Altcoins hardware wallet. The device is built on robust safety features for storing cryptographic assets and securing digital payments. The Ledger Nano S uses a secure OLED display to double-check and confirm each transaction using the buttons located on the side of the device.

Coinstop is excited to announce that the Ledger Nano S Color edition is now for sale, including a new set of products that celebrates the uniqueness of all the individuals that make up the cryptocurrency community.

All Ledger Nano S Color hardware wallets come with the uncompromising security features that Ledger users have come to expect, supporting 700+ cryptocurrencies, and with an easy-to-use interface that makes keeping your crypto assets safe and simple. The coloured edition is beautifully designed with simplicity in mind, coming in five new unique colours: blue, orange, pink, green, and transparent.

A Wallet for Existing Ledger Users

If you already own a Ledger Nano S, the new colour edition is the perfect complement, allowing you to differentiate between wallets with ease. You can separate your investments onto two or more wallets, differentiating between the colours. For example, you may want to use one wallet to keep Bitcoin and Litecoin, and another to store Ethereum and Ripple. Other individuals may be interested in using one wallet primarily for crypto assets and a second wallet primarily for utility apps, such as the Password Manager (available in developer mode), Hello and Woleet. Owning a second wallet adds an extra layer of security in the event that one of your wallets is lost or stolen. You can read about the benefits of having a second wallet here.

A Wallet for New Users

With a colour to suit every individual, the Ledger Nano S Color Edition is perfect for individuals starting out. Beginners who may only have a small amount of crypto assets will find the Ledger Nano S Color Edition easy to set up and navigate. With crypto hacks continuing at an alarming pace, it’s imperative that one’s assets are moved safely offline. The Ledger Nano S Color Edition is a secure way for new investors to protect themselves in style.

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Crypto Debit Cards Crypto Hardware Wallets Crypto News Payments

Ledger to Launch Debit Card Allowing Users to Use Crypto as Collateral

Hardware wallet maker Ledger is launching the Crypto Life card, a debit card that allows its users to spend crypto on goods and services or use it as collateral for cash purchases.

The ‘Crypto Life’ is Set for 2022

The new debit card was announced on December 9 during Op3n, Ledger’s biannual conference, and it’s set to debut in early 2022 for users in the UK, Germany and France, but those in the US will have to wait until the second quarter.

The Crypto Life (CL) card will carry out transactions using the Visa network. Users will be able to buy goods and services using the card, which is linked to Ledger Live, the desktop and mobile app that enables users to trade cryptocurrencies.

Funding the card is straightforward – users can top it up from the Ledger live app using a handful of coins such as BTC, ETH, USDT, and more. When it’s time to make a purchase, the funds are instantly converted to the fiat amount. Additionally, users can receive their paycheques using the card account and convert a percentage into BTC or ETH.

Users can also open a line of credit to spend on their card using crypto as collateral with rates going as low as zero percent. However, this feature depends on the region. US citizens won’t be able to take crypto loans due to regulatory issues in the country regarding crypto loans and transactions.

Moving to a Wider Audience

Ledger’s move comes as part of its plans to reach a wider audience. Rather than stick to making hardware wallets, it’s now following in the wake of Coinbase and other crypto companies by providing traditional banking services.

In August, Crypto News Australia reported that Ledger had enabled ETH staking directly form the Ledger Live wallet, thanks to a partnership with Lido, an ETH 2.0 liquid staking platform.

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Banking Bitcoin Crypto Hardware Wallets Crypto News

Is Remittance-Dependent Tonga the Next Nation to Adopt Bitcoin as Legal Tender?

The small Polynesian island nation of Tonga will follow the example set last month by El Salvador in making bitcoin legal tender, if at least one senior politician has his way.

Like the Central American republic, Tonga is one of the world’s most remittance-dependent economies. Tongan MP, barrister, hereditary landowner and bitcoin advocate Lord Fusitu’a believes the adoption of bitcoin as legal tender in Tonga can potentially offset the high remittance commissions charged by money transfer services such as Western Union.

Last month, Crypto News Australia reported that El Salvador’s bitcoin adoption could cost Western Union US$400 million per year.

Between 38 percent and 41.1 percent of our GDP, depending on which World Bank figures you use, is remittances. To get those remittances to Tonga, Western Union takes a 30 percent bite out of them, on average. In El Salvador, it’s closer to 50 percent.

Tongan MP Lord Fusitu’a

Fusitu’a believes bitcoin has a place in the Tongan financial ecosystem and believes it could work using digital wallets such as Strike. He also suggests that bitcoin payment apps could be adopted en masse as they would not require a parliamentary order to implement.

Bitcoin is the first truly global natively open monetary system. Blockchain is the most optimal storage medium for money if your goal is decentralisation and complete, egalitarian democratisation of money.

Tongan MP Lord Fusitu’a

Choice of Wallet Could Be a Problem

Fusitu’a cites Strike, the digital wallet of Chicago-based Zap Solutions, as a potential means of accepting bitcoin as payment in Tonga. He claims that using Strike to send money back to Tonga from countries such as New Zealand would not require an act of parliament or even an endorsement by the National Reserve Bank of Tonga.

However, earlier this year it was found that Zap Solutions lacked the licences to operate in most US states, potentially meaning most cash and crypto transfers to El Salvador using Strike are illegal. That would have obvious implications for Tonga.

Fusitu’a’s enthusiasm for bitcoin is not shared by everyone in Tonga. Sione Ngongo Kioa, governor of the Pacific island nation’s reserve bank, has already indicated the bank has no intention of accepting bitcoin as legal tender. 

“The adoption of bitcoin as an official alternative currency is definitely unlikely,” Kioa said.

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Bitcoin Crime Crypto Hardware Wallets Crypto Wallets

UK Student Bitcoin Mugging Highlights Importance of Multisig Wallets

A student starting at England’s University of Kent last year was threatened at knifepoint in the first week of term after his new “friend” and eight East London thugs paid a visit to his on-campus dorm room and demanded access to his bitcoin.

The amount stolen by the criminals was worth around £6,000 (US$8,200) at the time (12 months ago) but is now worth around US$93,000 as the price of bitcoin has risen. Another £3,000 (US$4000) of the student’s grant money was also stolen. The suspects were never charged.

This story should come as a warning not to disclose your crypto holdings to people you don’t know. Violent crimes targeting bitcoin theft are becoming increasingly common and with the cryptocurrency economy rising significantly over the past year, crypto robberies are also on the rise. Do not trust even your next Tinder date, as he or she could be a potential threat to your crypto holdings if you aren’t careful.

Keeping digital assets in mobile or hot wallets come with significant risk. If you are bullied or tricked into giving up your wallet keys, it is very difficult to recover your money.

Multisig Wallet Benefits

By using technology such as a Casa multisig wallet, crypto holders can significantly reduce the risk of losing control over their funds. Attackers cannot spend stolen funds if they don’t have all of the client’s different keys to gain full access to the compromised wallet.

Learn more about Casa’s multisig bitcoin wallet in this video:

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Australia Coinstop Crypto Hardware Wallets Crypto News

Crypto Hardware Wallet Shortage Hits Australia

The recent crypto boom in Australia has led to a shortage of crypto hardware wallets throughout the country as suppliers struggle to keep up with the demand.

Popular wallet suppliers in Australia such as Coinstop have been selling out of popular devices such as Trezor and Ledger as soon as they hit the shelves. They have seen a big uptick in the number of orders throughout 2021 with approximately 3.3 million Aussies now owning crypto.

Every bull cycle brings in a new wave of crypto investors of which many are worried about their security. That puts a lot of pressure on hardware manufacturers to keep up with demand and we’ve seen time and time again that they are unable to match the demand. Throw on top Covid and the chip shortages, and we now have a perfect recipe for supply outstripping demand.

Chris Pavlesic, Coinstop

With the growing number of crypto hacks and scams in Australia, there is an apparent need for people to protect their investments in cold storage. It’s not just retail crypto investors who need protection; institutions and SMSF accounts should also consider secure forms of storage for their crypto holdings.

Crypto hardware wallet shortage. Source: Coinstop Shop

Supplies have also been impacted by Covid delivery logistics, with new devices such as Ledger Nano X taking up to two weeks to be delivered from the official manufacturer in France.

Crypto Hardware Wallet Options in Australia

If you would like to protect your crypto with a hardware wallet, these are your current options:

  • Ledger Nano X (direct from manufacturer, order now, approximately 2 weeks delivery)
  • Trezor Model T (sold out, ETA 2022)
  • Ledger Nano S (in stock, order now, 2-3 day delivery)
  • Trezor (sold out, but you can pre-order now; ETA October 2021, but not promised)
  • Coolwallet Pro (in stock, order now, 2-3 day delivery)
  • Bitbox02 (in stock, order now, supply going fast)

Important: Please only buy your hardware wallets from trusted suppliers and never buy from eBay or other online marketplaces, or run the risk of losing all your holdings. Crypto News has partnered with Coinstop as our trusted supplier in Australia. Use the code CRYPTONEWS at checkout for an A$5 discount on your order.

Remember that you can also order directly from the manufacturers, however the benefits of ordering through a local distributor are cheaper pricing, faster express shipping, and ongoing local support.

View Coinstop shop

Further reading:

Categories
Coinbase Crypto Hardware Wallets Crypto News

Coinbase Offers Affected Users $100 in BTC Following 2FA Errors

The NASDAQ-traded cryptocurrency exchange Coinbase says it will disburse individual compensation payments of US$100 in bitcoin to some of its customers who were affected by the recent erroneous 2FA notifications: “We recognise that issues like this can hurt [users’] trust,“ the exchange said in a post on Reddit.

Coinbase Erroneously Sent 2FA Message to 125,000 Users

Two-factor authentication (2FA) serves as an extra layer of security for users’ digital assets on the platform. It’s a security system that requires two separate authentications in order to gain access to something – in this case, cryptocurrency.

On August 27, Coinbase erroneously passed a message to about 125,000 customers, informing them that their 2FA settings had been changed. Due to the false alarm, some of the affected users began panicking that their accounts had been compromised.

Comment from discussion Film2021’s comment from discussion "Erroneous 2FA Notifications".

Shortly after the notification, however, the Coinbase team recognised and halted the issue. Given this can impact users’ trust, the exchange opted to send US$100 in bitcoin as compensation to some of the affected users. 

We are crediting a small number of users who were adversely affected by this incident with $100USD worth of BTC.

Coinbase, Reddit post

It remains unknown how many users will receive the free money. It would cost Coinbase about US$12.5 million to compensate all 125,000 affected users. 

A Timely Reminder to Hold Your Own Keys

The Coinbase incident comes as a timely reminder as to why people should HODL their own cryptocurrencies rather than entrusting them to third-party companies. It is possible for an exchange’s security or data to be breached, which leaves users at the risk of losing their coins either through hacks or phishing, as seen with Coinbase early in July. 

HODLing with hardware wallets keeps your digital assets off the internet, thus safeguarding them from cyber attacks.

This incident was the last thing Coinbase needed. As reported by Crypto News Australia in late July, the exchange is already staring down the barrel of a class-action lawsuit in relation to its NASDAQ listing.