It’s important to understand that you can risk losing all your cryptocurrency if you don’t store it properly. Ensure you know how to store your cryptocurrency safely by understanding the security of your wallet/software, computer, network, phone, and home.
How to Store Cryptocurrency Safely
Do you want to know how to store your cryptocurrency safely? Are you worried about losing your investment due to a hack or scam? If so, then you need to read this post. We will discuss some of the best ways to store your cryptocurrency safely and keep it safe from harm. We will also discuss some common mistakes people make when storing cryptos. So, this post is for you, whether you are a beginner or a seasoned crypto enthusiast! Stay safe out there!
Hot Wallet Storage
A hot wallet is digital asset storage that is connected to the internet. Hot wallets are advantageous because they let you quickly and easily access your coins. However, they are also a major security risk because they are constantly exposed to the internet. That means that they are more susceptible to hacks and scams.
If you decide to store your coins in a hot wallet, you need to be extra careful. Make sure you only store a small number of coins in your hot wallet and always keep your private keys safe and secure. There are three types of hot wallets, and they are:
Desktop wallets store the private key for your cryptocurrency on your computer. These wallets are easy to use but less secure than other wallets. Your cryptos could be stolen if your computer is hacked or infected with malware. You can encrypt your wallet with a strong password to reduce this risk. You should also ensure to keep your computer’s anti-virus software up to date. That’s because they’re only accessible from the single computer where they’re installed. If you want to use a desktop wallet, install it on a secure computer.
The way desktop wallets work is pretty simple. Once you install the wallet on your computer, it generates a private and public key. The public key is like your bank account number you give people so they can send you money. The private key is like the PIN you use to access your bank account. Anyone who has your private key can access and spend your funds. That’s why keeping your private key safe and secure is essential. If someone gets their hands on your private key, they can easily access and spend your funds.
Note: Desktop wallets are more secure than mobile wallets but less convenient. Two of the best desktop wallets are Exodus and Atomic, which support multiple cryptos and 2-factor authentication.
Web wallets are online wallets that a third party hosts. They are convenient because they allow you to access your coins from anywhere in the world. However, they are less secure than other types of wallets because the private keys for your coins are stored on the server of the wallet provider. That means the wallet provider controls your coins and could be stolen if the wallet provider is hacked. To reduce this risk, you should only store a small number of tokens in your web wallet and always keep your private keys safe and secure.
The way a web wallet works is that you send your coins to the wallet provider’s address, and then they store the cryptos for you. When you want to spend your coins, you log in to the wallet and send them to the recipient’s address.
Mobile wallets are the most convenient since they can be accessed anywhere and anytime. However, they are also the least secure option since they are often stored on devices connected to the internet. If you decide to use a mobile wallet, take extra security measures, such as enabling two-factor authentication and storing your recovery phrase in a safe place. Mobile wallets are usually more secure than online wallets but less secure than desktop wallets.
Cold Wallet Storage
A cold wallet is a cryptocurrency wallet that stores the private keys for your coins in an offline environment. Cold wallets are considered very secure wallets since they are disconnected from the internet making them insusceptible to hacks. The downside of cold wallets is that they are less convenient to use than other types of wallets. The two most popular cold wallets are paper and hardware wallets.
How to Store Cryptocurrency Safely With Paper Wallets
A paper wallet is a cold wallet that stores the private keys for your coins on a piece of paper. Paper wallets are very secure since they are not connected to the internet and are therefore not susceptible to hacks. However, they are not as convenient to use as other wallets.
A hardware wallet is a type of cold wallet that stores the private keys for your coins on a physical device. Hardware wallets are considered very secure because they are not connected to the internet and therefore not vulnerable to hacking.
If you are serious about investing in cryptocurrency, you should consider getting a hardware wallet. One of the most popular hardware wallets is the Ledger Nano S and Trezor. Both wallets support a wide range of cryptocurrencies and are very user-friendly.
Security Precautions when Storing Cryptocurrency
Regardless of which type of wallet you use, there are some security precautions that you should always take when storing your cryptocurrency. Here are some tips:
Always Backup your Wallet
If you lose your wallet or if it is stolen, you will lose all of your coins. Therefore, it is always essential to have a backup of your wallet. The best way to backup your wallet is to use a hardware wallet like Ledger or Trezor. If you can’t afford them, write on multiple papers and store them in a secure place.
Wallet providers regularly release updates with new security features and bug fixes. Keeping your wallet software up to date ensures that your cryptos are safe and secure.
Multi-signature (or multi-sig) is a security measure requiring more than one person to sign a transaction. It is helpful for businesses, organizations, or even individuals that want to have multiple people approve a transaction before it is executed.
Use a Strong Password
When you create a wallet or signup for exchanges, you will be asked to choose a password. It is crucial to choose a strong password that hackers cannot easily guess. A strong password should be at least eight characters long and contain a mix of uppercase letters, lowercase letters, numbers, and symbols.
- Weak password: Monkey
- Better password: 1monkey
- Strong password: (1mon7eY)*$
Note: Make sure to create a strong password that will be hard to guess and resistant to different password hacks. Also, creating a strong password is not enough; you need to have a different password for different wallets. Do not use the same password for all the platforms.
Fun fact: Millions of people still use the words like “password” and “QWERTY” as their passwords. Make sure you are not one of them.
Use Two-Factor Authentication
Two-factor authentication (or 2FA) is an extra layer of security that requires you to confirm your identity with a code before you can access your account. That makes it much harder for hackers to gain access to your account.
Do Not Use Public WiFi to Access your Crypto Wallet or Exchanges
Public wifi networks are not secure and can be easily hacked. Therefore, using public wifi to access your crypto wallet or exchanges is not recommended. If you must use public wifi, make sure to use a VPN.
If you are interested to learn more about storing cryptocurrency and crypto security in general visit here.
With the proper precautions, your cryptocurrency can stay safe and secure, so you don’t have to worry while reaping the benefits of investing in these exciting new technologies. Thanks for reading, and I hope this article was helpful.