Keeping Your Cryptocurrency Safe

 

Cryptocurrency has come a long way. So many people use currencies like Bitcoin for purchases and it is also a common investment instrument.

While this popularity is generally good, it has made cryptocurrency a target of criminals. What makes this particularly troubling is that it is close to impossible to recover stolen coins once they are gone.

While exchanges and cryptocurrency services have gotten better at security by using Infrastructure as Code tools and other measures, there is still some risk. If you are going to invest in cryptocurrency or even use it for spending, you need to take measures to keep it secure.

Don’t Use Wallets from Providers

Most exchanges will offer a free crypto wallet that comes with the account. These can be convenient because they are already connected to the exchange and it makes it easy to handle transactions. They are also attractive for people new to cryptocurrency because they are simple and they do not require any technical knowhow to set up.

As attractive as they are, the provider-hosted wallets are probably the least secure. The risk with these is that all of your information and security keys are secured on the provider’s server. If there is a breach, you could lose all of the currency you have stored in the wallet.

Research Cryptocurrency Wallets

If you are going to use cryptocurrency, a wallet is a necessity. Before using the free wallet from the exchange or signing up for the first digital wallet you find, you should do a little research to find out about different wallets and what they have to offer.

The first thing you need to understand is that the right wallet will depend on your needs. Some people might be served better by a hardware wallet and others might prefer one that operates from an app on their phone. Assess your needs, learn about the different wallets, and make an informed choice.

Cold Wallets and Hot Wallets

One point to consider is the difference between hot wallets and cold wallets. A hot wallet is what most people think of when they think of crypto wallets. It might be a web-based application or it could be an app housed on your phone or personal computer. A cold wallet is physical storage that is not connected to the internet.

Since they are not connected to the internet, cold wallets tend to be more secure. With that said, they are less convenient for making transactions. A cold wallet could be an encrypted USB device or it could be a paper crypto wallet.

Consider Hybrid Storage

You don’t have to choose between just one type of wallet. If you own a lot of cryptocurrency, it can be a good idea to go with a hybrid approach to storage. You could keep the bulk of your coins in a cold storage device while using a hot wallet for the convenience of day-to-day transactions and trading. You just need to evaluate your daily needs and then store the appropriate amount in the hot wallet while keeping the rest of your coins secure offline.

Strong Passwords and Two-Factor Authentication

Your cryptocurrency is only going to be as safe as you make it with your security keys. Create the strongest passwords possible and use two-factor authentication. You should also make sure to use different passwords for all of your accounts and change the passwords at least once a year.

You could also consider a password manager to ensure secure passwords for your crypto wallets and accounts. However, you will need to make sure to keep the master password secure. If the master password is compromised, it could have an impact on all of your accounts.

As a final point, make sure all of your devices are secure. If you are handling transactions on an insecure phone or laptop, something like a keylogger could be used to comprise your accounts. Make sure to follow the best practices for device security and install an antimalware program on any device that is used for cryptocurrency transactions.