One of the reasons why many people are hesitant to invest in cryptocurrencies is because of security risks. And also knowing they have full control and responsibility for their investments as a crypto investor. Because unlike bank accounts insured by FDIC, the same level of protection in cryptocurrencies is not regulated by most governments. Therefore, you must keep your crypto safe any way you can because it will be very difficult to get your investments back if lost or stolen.
While similar practices in securing your bank accounts are needed, there are a few additional steps you may take to safeguard your crypto wallet. We’ve put together a guide to help you along the process. First, let’s take a closer look at a crypto wallet’s definition.
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What Is Crypto Wallet?
A crypto wallet or digital wallet can be an app, service, or a physical wallet (Ex. USB Stick), that holds public and private keys to keep your cryptocurrency safe. Those keys are strings of complex letters and numbers you can encrypt or decrypt during transactions.
To understand it better, you can think of private keys as your password or PIN, while the public key is your bank account username. Both are needed to access your cryptocurrency, so you must secure them.
In general, a crypto wallet provides various security features, including complex passwords and secret phrases, so it’s not easily compromised. But since many hacking attacks have been reported, taking additional security measures is advised.
Here are some ways to help secure your crypto wallets.
1. Use a “Cold” Wallet To Store Your Cryptocurrency.
You must know that there are two kinds of crypto wallets: “Hot” and “Cold” wallets.
“Hot” wallets are those connected on the internet, like Metamask and Exodus. You can log on to them anytime and anywhere you want. However, since this type of wallet can be accessed online, there’s a greater risk of data breaches. In other words, when your private key gets compromised during a breach, there’s a high possibility of losing your crypto investment.
Meanwhile, “cold” wallets are hardware wallets you can use offline. They hold your private key, which you can personalize if preferred. And they usually require some technical skills to set up, which makes them safer than hot wallets. However, know that if you misplace your cold wallet, you might not be able to access your investment.
A great way to manage your cryptocurrency is to keep a part of it for use in online transactions and store the majority in your cold wallet.
2. Enroll in Two-Factor Authentication (2FA).
By enrolling in 2FA, you give your account an extra layer of security. Whenever you or someone tries to log in, you’ll receive an SMS or an email with a verification code. Adding this step will make it more difficult for threat actors to access your account. Just be sure to never share any of your secret code with any third party. Keep in mind that no one from the cryptocurrency exchange would request your credentials.
3. Use Strong Passwords and Change Them Regularly.
Another way to keep your crypto wallet secure is by using a complicated and random password. You can use different sets of letters, numbers, and special characters. Never use a password you already use on other sites when selecting one for your crypto wallet. It also shouldn’t contain any personal information. If you’re finding it hard to create one, use a password manager instead of saving them to your browser. Finally, ensure that your password is safe and update it regularly.
4. Protect Your Seed Phrase.
For starters, a seed phrase is your crypto wallet’s master access key. It’s a series of 12 to 24 random words that need to be entered in the same sequence when signing up. It’s as important as your public and private keys, especially since it’s your only backup when you forget your PIN and password or lose your hardware wallet.
Therefore, keeping your seed phrase safe is vital. What you could do is simply write it on a piece of paper and place it in the same spot where you keep other important stuff.
5. Use A Secure WiFi Network.
Avoid using public WiFi to access your cryptocurrency accounts or exchanges. Use a VPN whenever you can to hide your location and IP address. It creates an encrypted tunnel effectively, so you can have control over your data while maintaining the privacy and security of your online activity.
6. Install Antivirus Software.
Installing antivirus software is another way to secure your crypto wallet. They scan all incoming emails and flag potential phishing scams. Just make sure to buy a licensed version and update them to the latest database.
7. Use Multiple Wallets For Your Investments.
Never put all your crypto investments in one wallet to reduce the risk of losing all of them. If one private key got compromised, you know that others are still safe. However, having more than one wallet means more private keys to use and protect, which can be complicated.
8. Be Vigilant: Avoid Phishing Attacks and Scams.
You’d be amazed at how many people fall for phishing. It is a targeted attack in which an attacker may pretend to be a reputable organization to obtain your personal information. They often send you emails where they require you to put your credentials to a legitimately-looking website. So, always look out for that and ensure that the link leads to the correct website and is HTTPS. You can save the URL to your favorites or type it directly into your browser to check instead of clicking on the links mentioned.
9. Always Keep Your Device And Programs Updated.
Always update your device and its programs to the latest version. It’s as important as installing antivirus software because the updates add new features and enhance functionality. You can choose to automate update installations for convenience.
The Bottom Line
While all of these may seem like a lot of work, know that it’s all worth it to protect your crypto investments from hackers. In this age of digitalization, innovation in blockchain technology is also being monitored by cyber actors. Therefore, applying our security tips is a must, knowing that the chances of recovering your cryptocurrency if lost or stolen are essentially nonexistent. Taking extra precautions upfront is worthwhile.