Germany Federal Office urges use of hardware wallets as crypto theft rises

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

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

The Information Security Office highlighted several risks associated with storing assets on third-party platforms like exchanges. Although exchange-based custody is more convenient, it is vulnerable to hackers, the BSI warned.

In contrast, the agency pointed out that self-custody wallets on phones or personal computers also have significant security flaws.

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

Crypto hacks

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

According to the report, stolen funds inflows nearly doubled from $857 million to $1.58 billion, while ransomware inflows rose by approximately 2%, from $449.1 million to $459.8 million.

It stated that the average amount of crypto 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 incidents in 2024 has only marginally outpaced that of 2023, rising at just 2.76% YoY. The average amount of value compromised per event has increased by 79.46%, rising from $5.9 million per event from January to July of 2023 to $10.6 million per event thus far in 2024, based on the value of the assets at the time of theft.”

Similarly, Scam Sniffer reported that crypto phishing attacks targeting 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, amounting to $58 million in total.