Tons of people are now interested in cryptocurrency as an investment opportunity. But, just because you watched a documentary on Netflix or something, doesn’t mean you have it all figured out. One aspect you need to be up to speed on from the very beginning is security.
The cryptocurrency market is vulnerable to cyber threats. Cybercriminals steal from exchanges and wallets with poor security. Malware can be used to access computer processing units to mine coins. Individuals lose their coins through phishing scams.
There are so many ways in which this market can be exploited. So, you need to follow best practices to keep your crypto wallet secure…
Keep Small Amounts in Your Hot Wallets
It’s doubtful that you walk around with a bunch of hard cash in your regular purse or wallet. Why? If you lose it, or it gets stolen then losses are kept to a minimum. You should follow the same rule for hot wallets, i.e. online wallets or software wallets. You may want some of your cryptocurrency in there for everyday use. But if it gets hacked you won’t lose all of your coins.
Use Cold Storage
To put it simply, it’s way harder for malicious individuals to steal coins you keep offline. There are a couple of secure forms of cold storage, or cold wallets, you need to know about.
Hardware wallets are external devices, such as USBs in which you can store your private keys. There are several popular versions out there such as Trezor and Ledger. Hardware wallets are useful because you can still use them to make transactions. Plug your hardware into a device, unlock your cryptocurrency and trade or buy stuff.
Some people use paper wallets, whereby you keep a copy of your recovery phrase (seed phrase) on a piece of paper. Naturally, this type of storage is not susceptible to hacking attempts or online scams, making them reasonably safe. But paper wallets come with their downsides, too. For example, they can be damaged or copied.
Only Trade on a Secure Connection
As you know, cryptocurrencies are inherently secure and anonymous. But the way they work also means that once a coin is gone from your wallet, it’s gone forever. Thus, you need to take precautions against cyber attacks.
At the most basic level, don’t work with cryptocurrency on a public or shared Wi-Fi network. It’s common sense. To make your connection even more secure, use a VPN to prevent hackers from intercepting your data. VPNs have the added bonus of providing greater anonymity. They hide your IPS address meaning that nobody can link your location to your wallet.
Employ Multisignature Technology
Using multisignature transactions (M-of-N transactions) adds a strong layer of protection. It basically means that each transaction requires multiple approvals. Some cryptocurrencies, such as Bitcoin, offer this. Furthermore, some web wallets use multisignature technology to make them more secure. It may seem time-consuming but it stops somebody else trying to spend your coins.
As an example, you may have a joint cryptocurrency address with your partner that requires two signatures for spending. Or your organization may provide access to its members but any withdrawal or spend requires three to five signatures.
Backup Your Keys in Multiple Secure Locations
Imagine if you lost your paper wallet in a fire. Or if a hacker compromised your account. You don’t want to lose everything all at once. So, it makes sense to have backups across multiple locations. This means you will be able to recover your coins in the worst-case scenario.
Furthermore, your beneficiary should know how to access your keys. We don’t like to think about these things but you don’t want your assets to be lost when you’re gone.
Follow Cybersecurity Best Practices
If you get sloppy, you give thieves a way in. So, use your common sense and follow cybersecurity best practices to keep your crypto assets safe.
First of all, resist the temptation to talk about your investments on social media. You won’t have much to brag about if your coins get stolen. I don’t know about you but I often see YouTubers discussing their cryptocurrency investments on YouTube etc. But the thing is, hackers also look out for targets on these platforms.
You need strong, unique passwords to protect your accounts. Never use any number or phrase that can be linked to you, such as birthdays or names etc. And beware of phishing emails and suspicious links.
All in all, if you invest in crypto, you need to utilize basic cybersecurity measures and then some. You should take every step to protect your assets in a market that is often targeted by cybercriminals. Your best bet is to spread your investments across multiple secure locations. And don’t overlook other important security measures, such as using a secure Internet connection.