By Nathan Ferguson
Considering investing in Bitcoin or another cryptocurrency for the first time? The best way to protect your bitcoin investment is to first educate yourself about it and understand how it works before you invest. Cryptocurrencies and blockchain-based technology promise a great deal of security.
It has been reported hundreds of times since 2016 that cryptocurrency traders and investors lost their savings for a variety of reasons. It is possible for bad actors to attack your savings in a number of ways, including improper key management, hacked exchanges, and phishing scams. Basically, you’re just your own bank when it comes to Bitcoin and crypto. But unlike traditional banking, there is almost always no way to retrieve your digital currency once it leaves your wallet. You cannot ensure your digital currency.
Because of this, it is of paramount importance to make every effort to keep your cryptocurrency holdings safe. Blockchain technology provides unparalleled freedom from banks which is one of the benefits of Bitcoin. Blockchain technology eliminates the need for banks. There is an element of liberation in that all these services that were originally provided by banks are now in your hands, namely the security of your assets.
These tips can help you to understand security basics. After you read these, you may want to learn more about the security of cryptocurrency. Most users never take any kind of security measures, which is why they are the ones who get hacked. The best way to approach this is to think of yourself as a sheriff who is protecting a safe from thieves. They (Hackers) are always prone to attacking the easy option and avoiding risking being easy to reach.
What is a cryptocurrency wallet?
A digital wallet or cryptocurrency wallet is a computer program, or physical device, such as a USB flash drive, that keeps your cryptos safe and secured by storing those public key and private key pairs. You can use these keys whenever you’re making crypto transactions to encrypt and decrypt information.
Crypto wallets are neither regulated by a centralized authority nor backed by an underlying insurance company or bank. Public keys are similar to bank account usernames, while private keys are similar to PIN codes or passwords. You need to guard your private keys, otherwise, you could lose all your money within seconds.
There are several protection mechanisms present in most cryptocurrency wallets, for instance, complex passwords and secret phrases. These protection mechanisms ensure that cryptocurrency wallets cannot be easily hacked. Nevertheless, crypto users should tighten up security measures due to the increase in hackers targeting crypto wallets and exchanges.
How To Choose The Best Crypto Wallet
As a result of a promising year in 2021, cryptocurrency prices are at an all-time high. Bitcoin and Ether hit all-time highs in November, with the crypto market’s market capitalization crossing $3 trillion. Furthermore, there have been a number of notable digital assets, including non-fungible tokens (NFTs), which have grown in popularity and accounted for millions of dollars in sales in the last year. In addition to this, the rapid advancement and availability of blockchain-based applications have resulted in rapid growth in the crypto market.
To capitalize on the potential of cryptocurrencies, a lot of people are interested in learning how to invest in cryptocurrency wallets. In what ways does a crypto wallet assist us with accessing the world of cryptocurrencies? Is choosing a crypto wallet an essential step? In this article, we outline five things you should keep in mind before deciding on your cryptocurrency wallet.
As a form of new financial instrument, cryptocurrencies have more or less reached the stage of being widely adopted.
Increasingly, people are asking themselves how to acquire and use a cryptocurrency wallet. Choosing a crypto wallet requires understanding its purpose and functions. Basically, a crypto wallet is a kind of storage that lets you store your crypto assets safely.
Unlike physical cash or credit/debit cards that are held in a wallet, cryptocurrency would not be stored in it.
The private keys of the cryptocurrencies exist on a blockchain network, and so a cryptocurrency wallet would store the private keys for them. A cryptocurrency wallet can therefore be thought of as a kind of key holder for your blockchain-stored cryptocurrencies.
How to use crypto wallets
It is certainly important for you to find the right “What is the best cryptocurrency wallet?” that best suits your needs. Before you pick one of the wallets available right now, you should understand how crypto wallets work. Crypto wallets store public and private keys. By sending your money to a wallet’s public key, a ledger of all transactions for the coin you’re sending will appear on the blockchain.
You can then access your cryptocurrencies using your private keys. A crypto wallet provides basic security through the use of private keys, as you can see. A person might also ask themselves questions such as “Which cryptocurrency wallet is secure?” when looking for the most secure cryptocurrency wallets.
Cryptocurrency security depends only on your wallet
In order to protect their cryptocurrency, users have to understand that they do not face a threat from the blockchain. Instead, they face a threat from their wallets or exchanges. The provider can keep track of and store information about you, including your private key, at the provider level.
Hackers can then access your savings account, allowing them to steal your money. Besides the increase in popularity of cryptocurrencies, there is also a rising amount of competition between digital wallets.
The reason why users need to be very selective when choosing a wallet is that there’s no guarantee that the wallet will be secure. It is generally recommended that you use cryptocurrency wallets created by trusted companies that have a history of high performance and reliability. Following that, you can do a number of things to ensure the safety of your Bitcoins and other cryptocurrencies. We’ll look at nine tips you need to follow.
9 Tips to Secure Your Cryptocurrency and Bitcoin Wallets
- Make your passwords complex
There are many readers who may already know this tip. In spite of this, it seems that the top three passwords still are 123456, 123456789, and whatever the most ridiculous password is each year.
You should try to make your password unique by using a combination of lower case and uppercase characters, numbers, and symbols. Make your password as long as possible. Password strength can be determined using online password testers. Password generators can be used to come up with new passwords.
One of the services that are very popular is password managers. Each online account you have is assigned a unique long, complex and unique password by them.
Companies of all sizes use these services because they are comfortable and safe. The safest solution will always be to write the passwords down (or store them in a cryptocurrency wallet).
- Privately store your cryptocurrency
A cryptocurrency investment may be something you’re proud of. Investors are braggarts of their investments and their performance. In fact, many investors did so during the great rally of 2017. People have learned from the lessons of history not to make this decision. One of the most extreme examples is the execution of a Bitcoin investor for transferring his cryptocurrency.
Unlike traditional banking, cryptocurrency does not have an identity associated with it. Bitcoin belongs to the person who owns the private keys. Hence, you won’t be able to reclaim the Bitcoin you sent to an address. Such a feature could be attractive to criminals.
You can avoid this by not bragging about your investments or at least by keeping a low profile about your holdings. Your friends may ask you how much cryptocurrency you own during conferences, meetups, or out of curiosity. For your security, do not answer this question if you have much money.
- Avoid phishing scams
Almost every online bank user knows about phishing scams which usually involve the theft of credentials. This disguised technique can also affect cryptocurrency exchanges and wallets. A scam called a “size-matching” scam is one of the simplest methods hackers use to steal Bitcoin and other cryptocurrencies.
A phishing scam creates a malicious website that mimics the real website. This means that the user is tricked and does not realize the redirect is fake. Hackers now have your credentials after the user inserts the username and password. In this way, they’ll be able to use your account to transfer funds to their wallets.
When you frequently access exchanges, bookmarking these websites can be an easy security measure. Always make sure that whenever you visit them, you use your bookmarks. The best way to detect phishing sites is to check for typos. There are several notable cases including myetherwallet (a renowned Ethereum wallet provider), which was victimized by various phishing scams recently.
A lot of times, you won’t notice anything amiss from the outside at first glance.
- Avoid storing cryptocurrency on exchanges
Crypto holders may make this mistake the most frequently. These platforms are already aimed at providing a clue as to what their purpose is from the word exchange. Rather than being used for storing cryptocurrencies, they are intended to act as an exchange. The largest number of Bitcoins have been stolen from exchanges rather than from the cryptocurrency itself. Although big exchanges have been hit, hackers usually target small exchanges with weak security.
This isn’t to tell you how much Binance and Poloniex are worth, but to let you know that even reputed exchanges can be hacked. The good news is that exchanges and their security have evolved over time. During the early days of cryptocurrency exchanges, where their security measures were weak, the biggest BTC hacks occurred. In spite of this, Binance was attacked in 2019. However, no exchange is entirely safe from hack attacks.
Only if you’re a frequent trader would it be wise to list your digital assets on exchanges. In case you are a long-term trader or a holder of Bitcoin or altcoins you should store your coins in a cryptocurrency wallet. As soon as you’ve completed the trade, you can send the other cryptocurrency, along with the FIAT that you have in your wallet. You control the money if you possess the private key.
- Protect your devices
Keep in mind the basics of safe usage such as not downloading suspicious files, keeping your firewall updated, and avoiding known risky websites. Check before installing software if the company behind it is transparent enough to be trusted or if other users have given their opinions of it.
- Purchase a hardware wallet for cryptocurrencies
The level of security you receive greatly depends on the amount of bitcoin you own. Generally, we recommend purchasing a cryptocurrency hardware wallet with a value greater than $500. The market offers a large selection of hardware wallets.
Cryptocurrency assets should be stored in a hardware wallet. Hardware wallets that are designed exclusively for cryptocurrency are considered specialized devices. You can sign transactions with a single click using the device, which stores your private keys in an impenetrable circuit. There are many different wallets that offer a seed to make it easy in case your device gets stolen or lost, you can easily transfer your private keys.
You may use hot wallets if you don’t have a large amount of bitcoin or simply prefer to use a more convenient wallet. Cryptocurrency hot wallets and hardware wallets have various features. It is safer to keep cryptocurrencies on a hot wallet than on an exchange if your device is in a secure environment.
- Configure two-factor authentication
An extra layer of validation security is provided by two-factor authentication. You can make the login process more secure by adding this step. An additional password must be entered to access. Passwords are generated by apps stored on your phone (for example, Google Authenticator and Authy). In order to increase security, new passwords are generated every few seconds.
An extra layer of external security is created in order to prevent hackers from getting through. For this to work, the phone would need to be stolen and accessed. Most service providers offer two-factor authentication, which is easy to install. To access your exchange account, you can use two-factor authentication via your email address. Some exchanges also give you the option to receive a random PIN via email or SMS. Regardless, it is strongly recommended to avoid the use of SMS verifications.
- Backup Your Wallets
If you want your wallet’s private keys to be secure, you should always store them offline. If they are stored offline, hackers cannot access them. Moreover, it is imperative that you have backups of your private keys that have also been kept offsite.
Furthermore, it is highly suggested that you keep a copy of your keys in an area away from your residence too – in the event of a fire, an earthquake, or anything else that might hinder the integrity of your home, you will have access to the keys.
It might seem surprising, but storing your private key in your bank’s safe is a good idea. However, you should only use this as a backup because your private keys should always be available to you.
Do you know the safest place to keep Bitcoin?
Since reaching an all-time high in late 2017 and declining slightly in popularity thereafter, the popularity of cryptocurrencies such as Bitcoin has continued to rise through 2019 and 2020. Likewise, increased publicized hacking events have taken place at the same time.
As a lot of investors are not experienced in investing, hackers are finding ways to steal funds despite the fact that they do not know how to keep investments secure. One of the most prevalent hacks has been to steal tokens in plain sight: hacks have been known to blatantly redirect tokens meant for one wallet to another. Seeing their tokens taken from them as they watch helplessly with no means of resistance is truly terrifying for the victims.
- There are various ways that users can lose bitcoins and other crypto tokens, such as theft, computer problems, and losing access keys.
- The best method for storing bitcoins is in cold storage (or offline wallets), because these wallets cannot be accessed over the Internet, although some users value the convenience of hot wallets.
- For the safest long-term storage of Bitcoin and other cryptocurrencies, one should use hardware wallets.
Digital wallets are used to store bitcoins, just as cash or credit cards are kept in physical wallets. There are many methods of storing bitcoins, from hardware wallets to website wallets. You can also keep a wallet on your computer, or phone, or print the addresses and private keys and keep them in a safe place. Do digital wallets provide adequate security? Is it up to the user to take care of the wallet? Bitcoin owners cannot access their currency without the private keys contained in their wallets.
One of the biggest risks to bitcoin security is that an individual may lose or have their private key stolen. A bitcoin user is not able to access bitcoins without a private key. It is possible for a user to lose a private key in addition to the loss of the private key due to technical failure (for example, a laptop hard drive crashing), or by losing the computer on which data is stored.
Conclusion
Keeping your currency secure with a Bitcoin wallet requires some learning so that you can understand the way it works, but once you are familiar with it you will not have a problem keeping it secure. It is up to you to take essential safety precautions to secure your wallet and protect your digital funds in this constantly evolving industry.
Be aware of new attack techniques, prevention strategies, and security news. Due to their growing popularity, hackers are becoming increasingly intrigued by them as the cryptocurrency market becomes more lucrative every day. There isn’t cause for alarm. You can become a cryptocurrency expert by keeping these cryptocurrency security tips in mind.