Federal Office for Information Security urges use of hardware wallets as crypto theft increases

The Federal Office for Information Security (BSI) advised crypto users to secure their digital assets with hardware wallets.

In the LinkedIn post, authorities declared hardware wallets the most secure method of storing digital assets, explaining that these devices can help keep a user’s private cryptographic keys in offline or “cold” storage. This offline storage ensures that the keys are safe until they are needed for a transaction.

The Office for Information Security pointed out several risks associated with storing assets on third-party platforms such as exchanges. Although exchange-based custody is more convenient, it is vulnerable to hacker attacks, the BSI warned.

In contrast, the authority pointed out that self-managed wallets on mobile phones or PCs also have significant security flaws.

Given these risks, the BSI recommends hardware wallets as the best option for securing cryptocurrencies. Pins protect these wallets and allow users to create secure backups.

Crypto hacks

This warning comes amid an increase in crypto thefts. Chainalysis reported that the crypto industry lost nearly $1.6 billion in the first half of 2024 due to exploits and attacks.

According to the report, inflows of stolen funds nearly doubled from $857 million to $1.58 billion, while inflows from ransomware increased by about 2 percent from $449.1 million to $459.8 million.

It said that the average amount of cryptocurrency stolen per heist increased by almost 80% during the period due to the increase in the value of digital assets. It added:

“The number of hacking attacks in 2024 only slightly exceeded that of 2023, increasing by just 2.76% year-over-year. The average value compromised per event increased by 79.46%, from $5.9 million per event from January to July 2023 to $10.6 million per event in 2024, based on the value of assets at the time of theft.”

Likewise, Scam Sniffer reported that crypto phishing attacks on individuals reached $341 million in the first half of the year, a significant increase from the $295 million stolen in all of 2023. The top 20 victims alone lost over $1 million each, for a total of $58 million.