Storing cryptocurrency safely and securely is essential if you are going to use it as an investment or use it as a form of payment. Unfortunately, cryptocurrency is not supported by the same level of security or regulation as traditional currencies. Therefore, it is important to understand how to store cryptocurrency safely before you start trading.
In this article, we will look at the best practices and tips for securely storing cryptocurrency.
Best Practices for Safely Storing Cryptocurrency
When it comes to storing cryptocurrency safely, there are general best practices that you should follow. If you don’t use these strategies, you may end up putting your cryptocurrency, and possibly your personal information, at risk.
- Always Investigate the Exchange or Wallet
Before you use any cryptocurrency exchange or wallet, do your research. That means looking into things such as who owns the exchange or wallet and how they store your funds, what security measures they have in place (including two factor authentication, which we will discuss later), if they have insurance in the event of theft, etc.
- Use Cold Storage
A cold storage wallet is simply a type of wallet that stores a copied, encrypted set of the user’s keys. Instead of storing the wallet on a computer or mobile, it is stored on a dedicated hardware device. This will keep your cryptocurrency assets safe from malicious attacks and malware.
- Be Aware of Phishing Scams and Fake Wallets
Phishing scams are common on the internet and target cryptocurrency users as well. With these scams, a malicious actor will attempt to convince you to provide them with your wallet details.
Make sure you are aware of what to look for if you think you are being targeted. Also, never download or use a “wallet” that you haven’t researched and confirmed is legitimate.
- Use Two-Factor or Multi-Factor Authentication
Two-factor authentication adds an extra layer of security to your account. It requires you to use two separate methods of identification when trying to log in. This could include:
• Password
• A code sent to your cell phone or email address
• A physical key-fob
• A biometric measure such as a fingerprint or voice recognition
By using two-factor authentication, you are making it much harder for a malicious actor to access your wallet.
- Use Strong Cryptographic Keys
Cryptographic keys are like your passwords for both your wallet and the cryptocurrency itself. Make sure you use a combination of numbers, symbols, and letters when creating your keys.
- Back Up Your Wallet
Backups are always important and should be done regularly, no matter what you are storing. It is especially important with cryptocurrencies because there is no centralized system you can use to restore your wallet.
- Limit Access to Your System
Limit the number of people that have access to your system and keys. People with access to your wallet can, unfortunately, steal or hack your funds.
Tips for Storing Cryptocurrency Securely
Now let’s look at some practical tips for safely storing cryptocurrency.
- Don’t Leave Your Funds on an Exchange
It is always best to transfer your crypto assets to your own wallet(s) for safe storage. That way, you have total control over your funds and can keep them safe.
2.Keep Your Private Keys Private
Your private keys are the key to your cryptocurrencies, that is why they need to be kept safe and secure. You will want to create strong passwords, keep your keys offline, in a safe place, and never share them with anyone.
- Split Your Funds
Having all your funds in one place can be dangerous, if something happens to that one account or wallet all your funds could be lost or accessed. Therefore, it is often a good idea to split your funds across different wallets, exchanges, and locations.
- Enable Wallets Security Features
Most cryptocurrency wallets come with additional security features, such as password protection, two-factor authentication, auto-lock, etc. Make sure to enable these features in order to keep your funds safe from unwanted access.
Storing cryptocurrency safely and securely is essential for those who are looking to use it as an investment or a form of payment. It is important to understand and follow some best practices for securely storing your cryptocurrency. By following the best practices and tips outlined in this article, you can ensure that your funds are kept safe from malicious actors.
