Whether you are a new investor or a seasoned veteran in the cryptosphere you always have to keep an eye on your security and know how to keep your cryptocurrency safe.
It is no secret that although there are a lot of benefits from owning cryptocurrencies there are also many risks. And these risks are not due to the fact that the crypto environment isn’t secure enough. By their very nature, cryptos are highly encrypted but hackers and other people are always looking to exploit every single weakness, sometimes going to extremes just for a few coins.
In other cases, the same high security that makes it a great alternative is the one that proposes a risk. If you were to lose your secure wallet or your password there is no way to get it back. In fact, the equivalent of millions of dollars has been lost due to simple mistakes like mistyping.
About Bitcoin Security
Since the first appearance of Bitcoin and other currencies, there has been news about massive losses and hacks. Anything from information breaches to people losing access to their Private Keys.
This doesn’t mean that owning crypto will automatically make you a victim of a hacker but since digital currencies are not regulated by an entity you usually have the full responsibility of your own assets.
Therefore, the success of your security measures will be directly related to your security practices rather than other external factors.
The underlying mechanisms that allow Bitcoin transactions and make Bitcoin security so great are not as simple as it may seem from the outside. Each transaction is verified a number of times before being completed and once done, it can’t be reversed.
Also, when you own a Bitcoin the proof of your ownership is stored on a decentralized ledger called Blockchain and each ownership is verified by a Private Key. This means that whoever holds that private key will have access to the coin.
The good thing is that you don’t need to understand the whole process and the algorithms that keep this in motion to keep your coins secure.
All you really need to do is follow basic security steps and know what storing method is the most suitable for you.
Best Way To Store Crypto
Keeping your coins secure is actually pretty straightforward and the best way to do it is by securing your crypto wallet.
To access the funds of a wallet, two pieces of information are needed. The Public Key and the Private Key. Since many exchanges store funds in “Hot Wallets”, the ownership of its funds is not completely in your power because they have both the public and the private key.
That information is accessible via username or an id, and here lies the biggest problem that many exchanges have had. Hacking an email address is much easier than hacking a highly encrypted key so if anyone gets access to your username and password they automatically get access to your funds.
To avoid this from happening exchanges have started storing their funds in cold wallets rather than hot wallets. So in the case of even a massive breach, the vast majority of the funds will not be accessed.
How To Secure Your Crypto Wallet
Crypto Wallets are a piece of software with the only purpose of storing your public and your private keys. You can send, receive and interact with blockchains while having a wallet. It is something you need to have if you’re going to manage your crypto.
The main difference between wallets is whether they’re “hot wallets” or “cold wallets”:
- Hot Wallets: These wallets are connected to the internet and most commonly used by some exchanges. Although they’re not the most secure wallets they offer an extremely easy way to perform transactions. Cloud Wallets and Mobile Mallets are a form of hot wallet.
- Cold Wallets: The most secure wallet and best way to store funds offline. The concept of these wallets can be a bit confusing because it doesn’t seem to be very intuitive. But you can actually still receive funds while having an offline paper wallet, there are also hardware wallets (USB stored).
Most of the crypto owners have a combination of both types of wallets. For trading and frequent transactions hot wallets are the best as they allow quick access. For holding currencies for the long term they use cold wallets.
To Protect Your Hot Wallet
Hot wallets are simply necessary, especially if you perform transactions often. And even though you can’t have complete control over every aspect of a hot wallet security there are still security measures that can allow you to prevent misfortune.
Use strong passwords
For your accounts, emails and everything you have online. It is sometimes complicated to keep track of everything but it is definitely worth it to protect not only your assets but your identity and other information as well.
Watch out for scammers and phishers
The thing with scams is that they don’t always look like scams, that’s why they’re so effective. There are times in which it is very clear that something is not right, but that is not always the case, and sometimes even a familiar face can be used against you.
To Protect Your Cold Wallet
Since cold wallets are not accessible through the internet in the way hot wallets are, it doesn’t matter if you get hacked, in theory nobody would have access to that wallet but you. But there are two sides of every coin. A cold wallet can be even a piece of paper, so whoever gets that piece of paper will be the new owner of the funds.
The security measures to protect these “physical wallets”, so to speak, is to prevent anyone else from having access to them. If a USB memory is your hardware wallet then don’t let anyone get it. And don’t tell anyone about it.
If you’re using a paper wallet, which is simply a piece of paper with the Public and Private Keys printed into it, do the same. And even if someone looks at that piece of paper, you should never tell what it is.
As you can see in the realistic and factual explanations there is no big science behind protecting your assets. Of course you have to be serious about every measure and pay attention to the way you manage your Bitcoins, but you can rest assured that paranoid behavior is not required in order to keep your crypto safe.
Just keep in mind the recommendations and know when to use a hot wallet and when to use a cold one. Once you feel comfortable with that the rest will be a piece of cake (without having to sacrifice your mental sanity).