You need a cryptocurrency wallet in order to hold or trade cryptocurrency Crypto Vanity. The addresses used to identify cryptocurrency wallets can take many different formats. A vanity address is one such type that has some intriguing features but can be a security issue.
What exactly is a cryptocurrency vanity address, and is it risky?
What Is a Crypto Vanity Address?
It’s best to understand crypto wallet addresses first before diving into crypto vanity addresses. A bitcoin wallet’s address is a combination of letters and digits that is used to identify it. All cryptocurrency wallets contain addresses, however only certain blockchains (like the privacy-focused Monero) display them publicly while others keep them hidden.
- Because they allow the user to customise their wallet address, crypto vanity addresses go above and beyond regular addresses. In other words, it enables users to design a unique address that differs from standard addresses. With vanity addresses, you may add your name, a catchy slogan, or anything similar to the first section of your address.
- Regular addresses and vanity addresses have several things in common. Most significantly, both wallets feature both a public and private key, which are essential for storing and selling cryptocurrency. These wallet addresses may send and receive money in the same way because of how they operate. The only thing separating the two is the address.
- At the time of writing, the Bitcoin vanity address is the one that is the most well-known example of a crypto vanity address. There are a tonne of generators available if you want a Bitcoin vanity address. You may build your own Bitcoin vanity address using these generators, which frequently take the form of websites. You must then import this address into your preferred Bitcoin wallet.
- But, you may create a vanity address without utilising an internet generator in a secure manner. Yet, this procedure might be difficult and calls for considerable technical expertise.
- Some wallet service providers, including Electrum, Blockchain.com, and the wallet on BTC.com, enable vanity addresses.
The 3 Risks of Crypto Vanity Addresses
While crypto vanity addresses provide users with ease and customization, there are certain security issues to take into account. Your addresses reveal the wallet where your cryptocurrency is held, thus it’s critical that you are aware of its security. What dangers are so present here?
1. Identity Exposure
The possibility for crypto vanity addresses to reveal your genuine identify is a major issue. Senders and recipients of transactions on a conventional blockchain are solely identified by their wallet addresses. As wallet addresses are only lines of random characters, it is difficult to identify the owner of a wallet just by glancing at one.
While it is possible to identify someone by their wallet address, this is not an easy or quick procedure. The risk of a malevolent actor learning who you are, however, increases if your address begins with a personal word or phrase.
Generally speaking, if you’re storing a lot of cryptocurrency, having a vanity address may make it more simpler for a hacker to locate and attack your wallet. So, utilising a vanity address might result in significant cash loss if your wallet is the focus of a breach if you’re a well-known crypto dealer.
2. Misdirected Transactions
Moreover, creating a unique address that is identical to another person’s may result in a mix-up when money is unintentionally sent to the incorrect wallet. As crypto transactions are irreversible, this might be a significant issue, particularly when significant amounts of crypto are being exchanged.
To confuse customers and increase the likelihood of a transaction being misdirected, a cybercriminal may even attempt to make their vanity address look like a well-known wallet. In such a case, a trader who is unaware of the situation may send money to the incorrect address, maybe more than once, before understanding there is a problem.
3. Shady Generators
Furthermore, using a unique address that is the same as someone else’s might lead to confusion if funds are mistakenly sent to the wrong wallet. This might be a big problem because cryptocurrency transactions are irreversible, especially when big quantities of cryptocurrency are being traded.
A cybercriminal may even try to make their vanity address resemble a well-known wallet in an effort to mislead clients and raise the possibility that a transaction may be redirected. A trader in such a scenario could transfer money to the erroneous address, possibly more than time, before realising there is an issue.
Have Vanity Addresses Been Hacked?
So, has a vanity address ever been targeted in a hack? Unfortunately, yes.
In September 2022, a crypto user lost almost one million dollars when their vanity address was hacked.
The hacked vanity address was created by Profanity, an address generator. This huge hack fueled concerns about vanity addresses and how they put users at risk.
When Should You Use a Crypto Vanity Address?
Are there any circumstances in which you would need to utilise a crypto vanity address, whether or not you like the sound of them?
In a nutshell, no. Crypto vanity addresses offer no additional functionality above standard wallet addresses and are more of a novelty choice. You truly are just getting the extra personalisation here.
But, if you own a bitcoin business and get payments into your wallet frequently, it could be helpful to start your address with your company name to make it more recognised.
But, it’s advisable to utilise a standard wallet address if you’re a casual cryptocurrency trader and want to maintain the highest level of protection and anonymity possible. Or, a private wallet address if you want to go further farther (such as a stealth address). If you don’t need a vanity address, you can be putting yourself at risk for theft and attacks.
Crypto Vanity Addresses May Expose You to Hacks
Although vanity addresses haven’t been proven to pose a significant danger, there appears to be a security and anonymity concern when customising your crypto address in this way. As a result, unless you have a very excellent cause, consider twice before switching to a vanity address as it might get you into trouble.