Getting cryptocurrency is one thing while storing it safely requires entirely different skills and knowledge. This guide teaches you how to protect your funds, choose the right wallet, and avoid the most common hazards of crypto security.
What Is A Crypto Wallet
A cryptocurrency wallet is a software program designed to store your public and private keys, send and receive digital currencies, monitor their balance, and interact with various blockchains. You need to have a cryptocurrency wallet to manage your crypto assets and keep them secure.
Types Of Cryptocurrency Wallets
There are four distinct categories of cryptocurrency wallets: paper, hardware, cloud, and online. Let’s have a look at each of them.
Paper wallets are generally classified as cold storage. The term “paper wallet” generally refers to a physical copy or paper print of your public and private keys. Other times it means software used to generate a pair of keys along with digital file for printing. Whichever the case, paper wallets can grant you a relatively high level of security. You can import your paper wallet into a software client or simply scan its QR code to move your funds.
If a paper wallet is available for cryptocurrency of your choice, you’re likely to find a guide on how to make one on the project’s website or community page.
Online wallets, by definition, are hot. Using a cloud wallet, your funds can be accessed from any computer, device, or location. They are super convenient, but they store your private keys online and can be controlled by third-parties. Therefore, they are more vulnerable to attacks and theft by design. Popular cloud wallets include:
A safer version of cloud wallets is non-custodial online wallets. They are accessible via web and apps but the service provider does not have access to your private keys. In most cases, not custodial wallets are a part of exchange platform, meaning that they let you trade your coins in a safe and secure manner. Examples of non-custodial cloud wallets include wallets by:
- Crypto.com DeFi wallet
Software wallets are downloaded and installed on a personal computer or smartphone. They are hot wallets. Both desktop and mobile wallets offer a high level of security; however, they cannot protect you against hacks and viruses, so you should try your best to stay malware-free.
- Electrum Wallet
- Infino Wallet
Unlike software wallets, hardware wallets store your private keys on an external device like USB. They are entirely cold and secure. Also, they are capable of making online payments, too. Some hardware wallets are compatible with web interfaces and support multiple currencies. They are designed to make transactions easy and convenient, so all you need to do is plug it in any online device, unlock your wallet, send currency, and confirm a transaction.
Popular hardware wallets include devices by:
Once you get a (hardware) cryptocurrency wallet you will also need to protect your private recovery seed phrase. One of the most reliable seed word protection tools is CryptoTag which allows you to store them on a virtually indestructable titanium plates.
Now that you know how to store cryptocurrency, it’s time to think about how to keep your crypto safe.
SIM-swaps — sometimes referred to as port-out scams — have come into the spotlight as a major concern for cryptocurrency holders in recent years.
A SIM swap is a criminal heist that targets weak points in two-factor authentication (2FA) systems, which many individuals use to provide an additional layer of security for their social media, banking or other online accounts. 2FA introduces an additional step for users’ online log-ins, requiring individuals to enter a one-time passcode received via a text message or phone call to their device.This can be an effective layer that thwarts potential hacks — but recently, criminals have found a way to use 2FA to their advantageThere are several methods you can use to reduce your risk of falling prey to a SIM swapper. One is to use Google Authenticator or a similar authentication app: unlike many forms of 2FA, this links the authentication method to your specific physical device, rather than to your phone number.
Practices to Prevent Stolen Private Keys
With great power comes great responsibility, and now it all rests on your ability to remain secure and keep your private keys private.
The most common security steps to take are:
- Don’t keep cryptocurrency in exchange for a prolonged period or longer than necessary.
- Always enable two-factor authentication (2FA) function.
- If you go for a hardware wallet, choose a pin code which is hard to guess, and never put your 24-word recovery sheet online.
- Don’t boast of your crypto holdings publicly under your real name or identifiable address. Some burglars manage to steal crypto funds even if you keep them in a cold (offline) storage.
- Trust only what you see on your hardware wallet screen and verify all the information on the device.
- Always assume that your devices can get compromised anytime, so always treat your computer or smartphone screen with caution.
In addition, follow these tips to minimize the chances of losing your crypto.
Be Aware Of Phishing Sites.
Whether you’re connecting to exchange or online wallet, confirm that you’re logging in to the right address. Many bogus websites imitate exchanges for the sole purpose of stealing your login data. Always check whether the website address is correct.
Login only to secure websites with a valid HTTPS certificate. Most legit sites have one. For extra safety, try browser plugins like “HTTPS Everywhere.”
Use a Secure Wi-Fi Connection.
Never connect to your online wallet, exchange account or another critical security point via public WiFi. Even when you’re at a presumably safe place, make sure your WiFi access point uses strong encryption like WPA-2 protocol.
Separate Your Funds.
Don’t keep all your crypto assets in one place. The best way to handle it is by using one or several cold storages for long-term holdings, and at least one hot wallet for trading and transactions.
Always secure your accounts with 2FA. Whenever possible, use software or hardware 2FA instruments rather than SMS.
Whitelist IP and Withdrawal Addresses.
If you have a static IP address, use it for your safety. Make sure that only you can access your accounts and funds.
Double-check Crypto Addresses.
Some malicious programs can edit and paste a wrong transaction address whenever you send a transaction. Typically, the new address belongs to an attacker. It’s better to be safe than sorry.
Use Security Measures You Can Handle.
Some people never feel secure and go to the furthest lengths to secure their cryptocurrency. However, they forget that they can also lose crypto to their security tools. Losing access to your accounts, funds, or wallets is as common as hacks. Don’t overcomplicate your security if that’s not what you’re into anyway. Strive for an appropriate balance between complexity and security.
Thank you for reading!