Introduced in 2009, cryptocurrencies had a long history of lack of public interest until 2017, when the price of digital assets began to skyrocket. The main problem with Bitcoin and altcoins like Ethereum or DOGE is that they have no presence in the physical world. As such, many crypto investors have a poor understanding of how digital assets and the decentralized system in which they circulate work. Marketed as a more secure form of money, cryptocurrencies have become a target for hackers devising various token theft schemes. Notably, many of the major thefts occurred right in plain sight, and there was nothing for coin holders to do but watch their crypto wallets drain. So, Bitcoin and altcoins are not perfect, and users can lose their savings in the blink of an eye due to a hacker attack or network glitch. We’re here to tell you the 7 best ways to secure your crypto savings so you can be sure your funds are protected.
Crypto Security is Important
According to the latest figures, around 110 million people worldwide use cryptocurrencies, and that number is set to grow rapidly. For the first few years, Bitcoin was virtually unheard of as it did not boast the high value and market capitalization that it has today. Now, many tech giants and retailers are already accepting crypto payments, and that is helping to spread the new kind of money around. However, the more people invest their trust and money in cryptocurrency, the more it becomes a tool of cybercrime, and this is where an advantage like anonymity plays a cruel trick on Bitcoin and other tokens. Given how often cryptocurrency is used for ransom payments and the number of fraudulent schemes in place to steal private keys, the question arises: how to store cryptocurrency safely?
The truth is, you need to always stay one step ahead of those who want to steal your tokens. Decided to buy Bitcoin with debit card, you should always be aware of the risks and take steps to secure your tokens. Before you buy tokens, you should keep the following important things in mind:
- Understanding the basics of cyber security is essential. One common way to steal private keys is through phishing emails. You must learn to recognize potentially dangerous emails and avoid malicious links that could cause you to lose your crypto savings.
- Create strong passwords and keep them in a safe place. Combining multi-factor authentication with choosing a secure place to store and manage passwords is an important preventive measure against unauthorized access to your Bitcoin wallet. Knowing how to properly store your passwords is important for the security of not only your crypto savings but also other important data that you store on your desktop or mobile devices.
- Ongoing monitoring as an additional security measure. While we said above that the biggest thefts of Bitcoin and other digital assets have occurred right in plain sight, most of the schemes are going on in the background. Use anti-malware software and network monitoring tools to keep your eyes and ears open.
- Refer to CCSS, the standard used for digital assets around the world. CCSS will give you a comprehensive understanding of how to buy Bitcoin or other cryptocurrencies, how to open a crypto wallet, how to keep private keys and more.
The measures listed above will help overcome the uncertainty about the fate of the tokens you buy. However, these are only general recommendations that both new and experienced crypto investors should not ignore. Below we will discuss the best way to store crypto, as well as give tips and advice on how to increase the security of your savings.
Where to Store Cryptocurrency – 7 Ways to Secure Your Crypto
As powerful and promising as blockchain technology is, cryptocurrency is still a major application. Many people use Bitcoin and other cryptocurrencies as a means of paying for goods and services, as an investment vehicle, and as an asset for trading. Whether you only want to buy a souvenir amount of coins or are aiming for a major investment, you need to take care of your cryptocurrency security. And we have compiled a list of 7 points that you should consider and follow.
Picking the Best Way to Store Cryptocurrency
To ensure that your crypto assets are secure, you need to choose a trustworthy wallet. And, when picking a wallet, you should check all the security features it offers. As the number of crypto users multiplies, so does the demand for crypto wallets. Today, there are many options for storing various digital assets. And while on the one hand, you get diversity, on the other hand, it can be a challenge to make the right choice. So, here are a few things you should check before settling on any particular crypto wallet:
- How clear and intuitive is the user interface?
- What is the audience of users of the crypto wallet service?
- Is the community around the crypto wallet service evolving?
- Is the crypto wallet compatible with popular desktop and mobile OSs?
- Is a permanent internet connection required?
Also, look at things like the tokens supported, the measures used to protect your data (e.g. two-factor authentication) and the quality of customer support.
Hot (Software) Wallets
In simple terms, it is software that constantly exchanges data with the internet and blockchain directly. Hot wallets are convenient in that they can be used for simple and quick transactions to receive and send tokens. The point is that once you receive a certain number of Bitcoins or another cryptocurrency, you will be assigned public and a private key. The public key is something like the username you use to log in to a news site or social platform. As for the private key, think of it as your ID number. A hot wallet is essentially a combination of a private and public key, software, and a user interface that allows you to perform various crypto transactions. Keep in mind that the main vulnerability of hot wallets comes from their advantage of continuously communicating with the network.
How to Store Cryptocurrency Offline – Hardware Wallets
It is essentially a physical device that securely stores your private keys, a critical piece of data that your digital coins depend on. Hardware wallets are also called cold wallets because they are not permanently connected to the blockchain. Hardware wallets are used by serious crypto investors who hold a significant number of tokens.
Wallets Provided by Exchanges
Many crypto exchanges such as Binance or Coinbase offer coin accounts directly on the platform. This is a handy way to store crypto because you do not need to connect your crypto wallet in order to exchange, buy or sell digital assets. However, history remembers many cases of Bitcoins and other coins being stolen from crypto users’ exchange wallets. We do not recommend the use of exchange accounts for long-term storage of large amounts.
Make Private Key Backups
Statistics show that around 20% of Bitcoins are lost untraceable. And this is true of many other cryptocurrencies, such as Litecoin and others. The lion’s share of lost digital assets are coins that have been forgotten. In simple terms, many users have simply lost their private key and are now unable to access their crypto savings. Therefore, you need to back up your private keys so that you don’t forget them forever. Choose reliable places to create and store backups. Cloud storage, for example, is hardly the best choice as it essentially involves storing your critical information on remote servers.
Protect Yourself from Phishing Attacks
This is important for those who prefer to use mobile wallets to always have quick access to their digital assets. However, today’s smartphones handle multiple data channels, including GSM text messaging, social media, email services and more. And that leaves ample opportunity for hackers to launch phishing campaigns to acquire sensitive data. To protect your Bitcoins and other digital assets, you need to install robust anti-virus software not only on your computer but also on your mobile device.
Choose Reliable Exchanges and Other Crypto-Services
If you decide to buy tokens through an exchange or brokerage platform, you need to check a few important things. Firstly, we recommend giving preference to centralized platforms adhering to KYC practices. Secondly, check the license of the platform of your choice. Licensed exchanges and brokers operate strictly in accordance with applicable laws. Third, find out what measures the platform uses to protect your personal and financial data, such as SSL data encryption, two-factor authentication, etc.
Find Out How the Wallet Handles Your Data
There have been cases where fraudulent services designed to steal users’ digital coins have offered crypto wallets. Therefore, you need to check the wallet provider. Find out how many people are using the wallet, if there have been any serious complaints about the online service and cases of token theft. Do your own research on the crypto wallet market and give preference to the most popular online service in the end.
Update the Wallet Software
Like any other software product, a crypto wallet is an application that regularly receives new versions with bug fixes and security enhancements. From time to time, hackers find vulnerabilities in the software, and developers tend to close them quickly by releasing updates. Try to keep the software updated for all platforms and gadgets on which you use crypto wallets.
Hide your Network Address
VPN services that replace your real IP with a fake one can provide an extra layer of security for your wallet. By browsing the network, hackers are able to link device IDs and user network addresses to public wallet addresses. VPN services spoof your real IP address, thereby covering your network traces. For more reliability, you should use a paid VPN service, as free options may not work properly. Choose a reliable service with a lot of positive user reviews.
So, we’ve covered a lot of information regarding cryptocurrency security and provided you with the 7 best ways to secure your crypto savings. Also keep in mind that you should use the right exchanges, brokerage companies and crypto wallet services that have literally stood the test of time. At the end of the day, understanding how to keep your crypto savings safe directly determines your profits from trading or investing in crypto assets.
1. What is cryptocurrency?
A cryptocurrency is a new form of money and a digital asset that operates on a distributed ledger called a blockchain. Not represented in the real world, crypto is all about transaction records stored as blocks in a specially designed database. You can buy tokens with fiat money, send them to someone, and pay with them at places that accept crypto as a payment option. You can also trade crypto like an asset and invest in crypto for long-term returns.
2. What is a crypto wallet?
It is a software or physical device designed to store tokens such as Bitcoin, Ethereum, Litecoin and others. It is essentially a piece of code with a user interface that offers a simple way to manage your crypto savings. Using a crypto wallet, you can receive coins, send them to someone, as well as pay for goods or services in places that accept crypto payments.
3. What is the difference between a hot wallet and a cold wallet?
A so-called hot wallet is an online service or program that exchanges data with blockchain over an internet connection permanently. A hot wallet is a good solution for those who store small amounts of crypto or trade. A cold wallet is an application or physical device that is not permanently connected to the network, making it the safest way to store crypto.
4. What are the risks involved in storing Bitcoin and other tokens?
Many crypto enthusiasts face various risks due to the mistakes they make:
· Storing large amounts of coins on wallets provided by exchanges or brokerage platforms.
· Storing a private key on an unsecured local device connected to the internet.
· Not backing up your private key may result in a loss of coins if you forget your key.
· Phishing campaigns launched by hackers via email and other communication channels.
· Disclosure of your crypto wallet to the public inadvertently.
5. What measures can I take to ensure the security of my crypto savings?
There are several measures that all crypto-holders should adhere to:
· Work only with reliable exchanges, brokerage companies and crypto wallet services. Check the license, the security measures in place, and how the customer support team works.
· Think of a strong password to secure both your personal data and your crypto savings.
· Keep your private key secret. Whoever gets your private key can use your digital coins as they see fit. Keep in mind that cryptocurrency transactions are irreversible. Also, due to its decentralized nature, cryptocurrency is not regulated by anyone. This means that you are unlikely to recover your lost coins if they are stolen.
6. Are mobile crypto wallets secure?
A mobile wallet is the most convenient solution, as it allows you to perform crypto transactions right on the go. However, almost any mobile crypto account is a hot wallet as the mobile phone is almost always exchanging data over wireless networks. On the other hand, mobile devices with their biometrics-based security systems are more robust than desktop devices. To protect your mobile wallet, it is a good idea to install anti malware software on your smartphone or tablet.