Two Factor Authentication is a way to secure an email account or cloud service, for example. It serves as an extra layer of security. It is also very important in the world of cryptocurrencies that you use this.
In this article, we explain what 2FA or two-step verification is and how to use it. We also give a number of examples of exchanges on which you can (and should) use it. We start with an explanation of the concept itself.
What is Two Factor Authentication?
Two Factor Authentication is abbreviated as 2FA. By setting up Two Factor Authentication you add an extra layer of security to an account. This is also known as double security or authentication. An access code is sent to your own device with which you can log in.
In this way, it is not enough for hackers to only have a username and password to log in to an account. You only get access to a website or account if you have a combination of username, password, and authentication code.
Why 2FA is crucial in cryptocurrency
The biggest threat to your crypto investment is not the volatility, but the security of the digital currency. While most people are switching to hardware wallets, such as the Ledger Nano S, many still keep money on exchanges or in online wallets.
It is certainly not the best and most secure method, but for some, it is the most suitable option, because setting up an individual wallet per currency is almost impossible.
You must have faith in the exchange where you keep the digital currency. Still, closing an exchange is not the biggest concern you should have. The bigger concern here is getting hacked, due to your own personal negligence and poor security practices.
How does secure login work?
By making sure that the login procedure involves something that only yourself would have. The following factors are usually associated with the credential:
Something you know: This could include a combination of passwords, PINs, codes, or answers to security questions.
Something you own: This includes a smart card, password, or code sent to your email or physical hardware, such as a cell phone.
Something that you are: This involves a combination of biometrics, such as a fingerprint, your retinal pattern, or even your voice.
Example of 2FA
This example is a traditional example and has nothing to do with cryptocurrencies. Later on this page, we give an example with cryptocurrencies. Suppose you rent a safe deposit box from a bank. Here you can store valuable physical items. The bank will give you the key to the safe, but two keys are needed to access the safe. Your key and the bank’s key. This is really just two-step verification, 2FA, or Two Factor Authentication.
Similarly, the debit card is also a form of 2FA. You cannot make a cash withdrawal without a debit card or a PIN code. You cannot withdraw money separately.
How exactly does 2FA work?
Two-Factor-Authentication works in the same way as an existing login procedure. The only difference is that you now have to enter a lot of extra information in combination with your username and password. This additional information can be passed on to you using a one-time password. This is called a One Time Password (OTP). This is often sent to a cell phone or email address. It can also take the form of a code in an app. The apps Google Authenticator or Authy are the most popular. You will then see a code in the app on your phone that you must use in addition to a username and password.
Using an email or SMS for authentication is not always recommended, as it is easier for a hacker to hack an email or social engineering to get a copy of a SIM card back.
However, when using a mobile app used to generate a token, you have full control over its security. If you haven’t used 2FA before, you should from now on. It’s easy and makes account security more advanced. You will only be able to access the website after you have entered this extra code.
Benefits of Two Factor Authentication (2FA)
Below are some general reasons why you should activate 2FA immediately on any exchange or website where you operate, store, or trade digital currencies.
2FA adds a much-needed layer of security to a trading account. This means that even if there is a data theft at an exchange – which happens more often than you realize, the hackers will not be able to log into your account. Not even after they have your username and password. Since the hacker probably won’t have access to your phone or email address, this feature makes 2FA very necessary for users looking to increase the security of their accounts.
This is true even in the case of a Brute Force attack, where sophisticated software is used to bypass security and steal an account’s credentials.
Improved accessibility and productivity
With an increased sense of security, employees and management do not need to be in a secure office environment to access highly sensitive data. It’s now possible to simply access data on the go with two-step verification. As a result, employees now have access to company data and other documents they need on the road. This can be done via any virtual device.
Even if an employee uses a personal tablet to log in to the company website or company portal, no other family member can access the information while using the tablet later. Since 2FA makes it impossible to log in even if the username and password are stored in the browser.
Lower Security Management Costs
Due to the growing threat of coordinated cyberattacks from around the world, cybersecurity is at the highest level. This has motivated organizations to critically address this issue and adopt the best security practices of the virtual world.
But the costs prohibited from such practices are often high. 2FA provides a simple and easy way for organizations to manage security vulnerabilities. This is particularly relevant for small businesses and start-ups, who are always looking for cost-effective solutions.
Efficient Customer Management
Companies often face the problem of handling customer queries related to login issues. This usually takes a lot of valuable time from help desks or account managers if it is not automated.
Two-factor authentication can eliminate this inefficiency by allowing users to securely reset passwords themselves using a combination of their email and the authentication factor that they have chosen.
Fighting Identity Theft
There is a lot at stake in the event that a hacker gains control over, for example, your exchange account. Identity theft is one of the biggest problems in the world today. A recent Identity Fraud Study (2017) study found that $16 billion was stolen from 15.4 million customers in the United States alone. More than 107 billion has been stolen in the past 6 years alone.
If a hacker has control over an account, he can also get hold of all other linked accounts and sensitive data. For example, if an exchange is hacked today, all of your linked bank account information and KYC data will be at risk.
Which 2FA app should you use?
The most modern and secure way to use 2FA is to use a hardware device, such as YubiKey. However, a majority of people use a smartphone app, such as Google Authenticator or Authy. For example, anyone who trades a lot on Binance, Bittrex or another exchange can very well use the Google app for 2FA.
2FA: a crypto example step-by-step plan
For the following example, we took the exchange Binance. It is of course possible in a similar way to secure another exchange account with 2FA or two-step verification.
Conclusion: 2FA is not an option but an absolute requirement
Setting up 2FA for crypto exchanges, and email accounts, or protecting other sensitive information is not an option. It is certainly a requirement. It is not for nothing that cybercrime and cybersecurity are in the news so often. Identity theft is also a hot topic.
It goes without saying that it would be foolish not to use two-step verification in today’s uncertain world of cybercrime. Always remember that your safety is in your own hands at all times and you can only blame yourself if something goes wrong.