The greatest advantage of blockchain technology (upon which cryptocurrencies are based) is its decentralization. However, lacking a central authority means that individuals have greater responsibility for protecting their transactions and wallets. You need to know how to protect your crypto wallet.
How to Protect Your Crypto Wallet
Technically, a crypto wallet does not store your coins; it holds the private key that lets you make cryptocurrency transactions online. The private key is your unique digital identity and anyone who gets to know it can fraudulently transact as you. And that’s really terrible given that blockchain transactions are irreversible.
Historically, there have been numerous news of crypto wallets and even exchanges being hacked. 2019 was a record-breaking year that saw the loss of at least $292,665,886 in cryptocurrency to hackers. One of the most notable hacks occurred in July, breaching the accounts of thousands of GateHub’s customers.
In order not to fall, victim, there are certain precautions you must take, explained below:
1) Store your keys offline
Storing your private keys offline is as simple as writing them on a piece of paper that is kept safely. But that could be dangerous as the paper can get missing or destroyed, locking you out of your accounts forever. A more viable alternative is a cold wallet which is a hardware wallet, a small (USB-like) device that stores your private keys.
Cloud wallets have their own advantages but a serious disadvantage is that they are prone to cyber hacks. Cold wallets such as those provided by Ledger, Bitlox, and Trezor come encrypted and don’t connect to the internet. Hence, your keys are safe unless you somehow lose the wallet. Before you buy one, though, keep in mind that cold wallets have supported tokens.
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2) Access the internet securely
When making crypto transactions, only access the internet via secure networks, especially if your wallet is software-based. By all means, avoid public networks; they can never be trusted.
When accessing the internet too, use a VPN (Virtual Private Network) as an additional security layer. A VPN masks your IP address with a virtual one that allows you to access the internet anonymously, making it difficult for hackers to track your online actions.
3) Keep multiple wallets
Diversifying your portfolio mitigates the effect of any breach to your account. Keeping multiple wallets is particularly necessary if you make frequent transactions. You can have one wallet to hold the small funds you need to transact daily, while the rest is secure in a separate wallet. You can create as many wallets as you deem necessary.
If you think keeping multiple wallets sounds like a good idea, start looking into: cryptoanalysis, crypto-strategies, as well as an unbiased bitcoin evolution app.
4) Secure your PC
Viruses, malware, and phishing attacks, etc. are so rampant now, and you can only do yourself good by using a strong antivirus and firewall to avoid hackers tampering with your device. Likewise, keep your antivirus software up-to-date at all times. Antivirus software security updates improve the level of protection to handle new attack modes and vulnerabilities.
That should do, but a greater level of security would be substituting your OS for Linux, which has proved a more secure choice. Also, be careful when browsing as to avoid suspicious and unknown links, which could be leeway for attacks.
5) Password security
Your crypto wallet holds your sensitive personal details and also your money, and so your security must be top-notch. Use a unique password for your crypto wallet; if you have multiple wallets, use separate passwords for each. Also, avoid making any of your personal information (date of birth, age, a relative’s name, etc.) as your password. Your password should be something you can easily remember but which another person cannot guess.
To make your account more secure, use multi-factor authentication. Even if someone gets your password and tries to access your account, they wouldn’t be able to do so until they supply a time-bound dynamic code accessible to you alone through your phone. Popular authentication apps include Google Authenticator and Authy.
6) Have a backup ready
What if your wallet does get hacked? The solution to that must come before, not after. And it is that you should have multiple backups of your wallet. In case of any unforeseen calamity, you can then easily gain access to your wallet and restore data. Also, once such an event happens, you should move the wallet data and your funds to a different wallet while you destroy all prior copies and create new backups.
How to Protect Your Crypto Wallet – In Conclusion
With cybersecurity, you can never be too careful. You can only achieve true security by blocking all known loopholes and being cautious with your online activities. Likewise, update yourself with security news about the latest attack modes and prevention strategies. But remember that you are solely responsible for your own security, as no third party is involved, being a decentralized system. Following the precautions above is a sure way to keep your crypto funds away from prying eyes and malevolent hands.
Are you ready to protect your crypto wallet? How secure do you think you are?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.