Cryptocurrency is one topic that is the mouth of so many people right now, it still remains a thing of wonder how the idea of “digital currency” has come to light and is succeeding while at it. Although so many people frowned at the thought over 10 years ago when the idea of bitcoin was introduced the massive reception it has gotten is amazing even though the whole world is yet to completely accept it.
A problem with cryptocurrency is the fact it is an anonymous currency. You can only get to know how much is in a particular wallet, but you can never get to know the user or owner of that wallet as there is no name or as much as a moniker attached to it. In this case, it has become very difficult to trace a stolen cryptocurrency. The most that any cryptocurrency user can do for themselves is to properly secure their wallet. This article will share the best practices that a cryptocurrency user can use to secure their funds.
Telling people how much cryptocurrency you own
First, it is very easy for anyone to become a target if a cryptocurrency owner gets to reveal just how much cryptocurrency they own. Just like the winners of a lottery are advised to contact a lawyer first before telling people around them that they’ve won a lottery for security reasons. When pressed about this situation, the best answer to give is to say you own “some cryptocurrency” or provide other non-answers.
Using Cold Wallet Is A Good Idea
Then, there are two types of cryptocurrency wallets, a hot wallet (connected to the internet) and a cold wallet (an offline wallet). It is not totally advisable to store cryptocurrency in a hot wallet as a hot wallet is good for storing cryptocurrencies that are used for day to day transactions but are easier to steal from. A cold wallet, on the other hand, is a safe place to store most of your cryptocurrencies as it is an offline wallet that is immune to hacking.
An example of a cold wallet is a hardware wallet. Hardware wallets look like an external hard drive but are specifically built for the storage of cryptocurrencies. Most har wallets are tamper-proof and will erase themselves if anybody tries to bring into it either physically or by attempting too many passwords. Hard wallets are better options than laptops or any general-purpose device that can have the wallet on them attacked forever when stolen.
Use Exchange Wallets As Long As You Are Supposed To
It really is not advisable to store cryptocurrency in exchange wallets. Exchange wallets are used only when cryptocurrency needs to be traded. Users don’t have total control over exchange wallets and it really is risky leaving a bunch of your asset in a wallet that can be manipulated without your influence and are also prone to cyber-attacks.
Cryptocurrency exchanges are known to fail very quickly and there really are no fall back plans except those arranged by the exchange. If a cryptocurrency exchange should fail, users may never get their cryptocurrencies back, also, the funds that are stored in the exchange wallet may even be used in an attempt to prop up the failing exchange without the knowledge of the user.
Always Encrypt Your Wallets
One challenging thing for cryptocurrency users is to keep their wallets secure in the case that loses their files to online theft. To better secure a wallet, the first line of defence is to choose a proper password that consists of length and also a combination of alpha-numeric characters, complexity does not always mean secure when it comes to password.
Store Seed Phrases Across Different Devices And Location
Standard seed phrases are those curious string of 24 words from which a private key is derived. It is very important that cryptocurrency users manage their seed with the utmost care. If it is written down on a paper, it is advisable to consider making two copies and storing them in separate locations. SD cards are another storage option but are not a good option because they rarely last for more than five years, and they could be easily wiped by a pinch (EMP bomb). A good approach is using both analogue and digital methods just to be safe (some people hammer their seed phrases into steel). For top security, it is best to store pieces of the seed phrase in separate, safe locations that can be easily remembered and meticulously record the steps taken to do so, so as to be able to recreate the seed when the need for such arises.
These are some of the best practices a user can take to manage their cryptocurrency in a secure way. Never forget the famous saying “Not your key, not your coin!”