When it comes to owning cryptocurrency, you are your own bank. And while that does come with many advantages, it also puts the means of security in your hands. You may think your cryptocurrency is secure, but if you aren’t following the below basic security principles, you could be at risk of losing your funds.
USE A COLD WALLET
There is one way to keep your assets safe that stands tall amongst the rest: cold storage hardware wallets. These devices allow you to retain the ownership of your private key, while also making it easy to trade with a wide range of cryptocurrencies when you safely connect to a computer. By securely switching between the functionality of hot and cold wallets, you can rest assured that your crypto wealth is in your hands, even if you lose the device.
Your private keys are generated and stored on the hardware wallet which is then protected by a PIN and an optional passphrase. Should a thief take possession of your hardware wallet, it’s near impossible for them to extract your keys. Most hardware wallets will wipe the device after a certain amount of incorrect pin entries, further protecting your assets. The keys are never exposed to the internet so they can’t be stolen or copied. That’s why it’s known as cold storage.
MAINTAIN MULTIPLE WALLETS
The preferred method of many longtime HODLers is to store funds on multiple hardware wallets and scatter them far and wide. Using hardware wallets from multiple vendors and keeping them in multiple locations ensures that no single event will have you losing all of your funds.
If you store your cryptocurrency on a single hardware wallet, you are betting all of your cryptocurrency on a single seed key. Suppose you lose that key; you’ve now lost all of your coins. On the other hand, if you store your assets across multiple devices, even if you do lose one key, you haven’t lost all of your crypto. It’s a much safer option and helps you mitigate the risk of physical threats. However, with more wallets does come more responsibility to keep several keys safe, which takes us to our next point.
USE A RECOVERY PHRASE STORAGE DEVICE
Your 12/18/24-word recovery phrase is used to access the cryptocurrency in your wallet. Anyone who knows your recovery phrase can access your wallet and funds, so it’s vital that you keep it private and secure.
If your hardware wallet breaks, is stolen or misplaced, your recovery phrase can be used to restore it. But if your recovery phrase is stolen or misplaced, there is no bank or institution to back you up or give you a replacement. And because of the secure nature and random mathematical sequences used to generate the private key, there’s no way you or anyone else can recover it, so you will lose access to your cryptocurrency.
There are companies such as Billfodl, who have created devices to store your recovery phrase. The Billfodl is constructed of 316 stainless steel, with a melting point of almost 1400 degrees celsius. It can withstand more than double the temperature of an average house fire and it’s impervious to any type of electrical hazard. Using a randomised set of character tiles, you simply recreate your recovery phrase in the steel unit, creating an almost indestructible backup.
USE TWO-FACTOR AUTHENTICATION (2FA) ON ALL ACCOUNTS
Two-factor authentication is a second layer of security that involves a unique code being generated on an app on your phone or other electronic devices. That code, along with your username and password, is used to log into accounts on which you’ve set up two-factor. This means, on accounts where you have 2FA set up, you’ll need both the 2FA code for that specific account and the username and password to log in. Two-factor authentication allows you to add another layer of security to your account which is very important when it comes to your cryptocurrency.
While some of these best practices may require you to put in a little extra effort to secure your cryptocurrency, it’s well worth it. Here at Coinstop, we remain committed to providing you with the latest in crypto security, so you can ensure your assets are safe. To visit our store, head here.