What is 2 Factor Authentication & How it Protects Your Crypto Wallet

Needless to say that in the present-day online environment security concerns have become a buzzword, especially for people dealing with cryptocurrency. Going on a cryptocurrency exchange or storing funds in online wallets inevitably exposes you to numerous security risks threatening your digital assets. Evidently, as cyber criminals become increasingly sophisticated, the customary password-only approach fails to protect your crypto savings effectively. Fortunately, in response to a higher demand for safeguard measures, various types of 2 Factor Authentication have grown widely available on almost every crypto-related sites.

To put it simply, 2 Factor Authentication (2FA) is an identification mechanism that requires introducing of two pieces of information (factors) to the authorization algorithm to validate access to the data. Basically, it is sort of a supplementary instrument that enhances the traditional  ‘username plus password’ model. After entering a username and a password, a person will be asked for another piece of evidence proving their identity.

This second factor may be:

  • what you know: one-time password (OTP), PIN, answers to “secret questions”, static passcodes, etc.;
  • what you have: a smartphone, a bank card, a secret token, or a USB key;
  • what you are: biometric data represented by a fingerprint, eye iris, a voice, typing speed, etc.;
  • where you are: proof of the location such as GPS signal or connection to a specific network.

You may rest assured that with 2FA even if you’ve lost your mobile, the account will not be accessible to any attacker until both confirming elements are submitted correctly.

Since cryptocurrency is utterly vulnerable to online fraudulent practices, two-step protection is vital when entrusting your funds into care of crypto wallets or while trading on digital assets exchanges. Nowadays, the majority of the crypto venues along with crypto wallet accommodations have already equipped their platforms with 2FA. The authentication procedure may be done in multiple ways – by means of Google Authenticator, Yubikey, SMS-code, biometrics and more.

The most favored authentication tool, though, is Google’s 2-step verification, applicable to smartphones. To prove identity, this service uses unique digit codes as a second stage of verification. So even in case the keylogger is aware of your username and password, they will fail getting into your account unless they know the secret key generated within the system, which takes incomparably more time and effort to exercise.    

Speaking of cryptocurrency wallets security, additional precautionary measures will never be excessive, considering virtual nature of finances. When using any wallet, one of the most advisable antidotes to possible hacks is topping up further safety layers, and the more the better. So before embarking on the crypto venture, bear in mind that cryptocurrency can’t be reimbursed once it is thieved; consequently, 2 Factor Authentication isn’t merely an option, but a necessity in the crypto realm.