Best Practices for Securing Your Cryptocurrencies & Crypto Wallets
Because cryptocurrencies have become highly valuable and continue to rise in value, it is crucial that best practices be employed to secure them along with the cryptocurrency wallets that store them, especially when hackers are knowledgeable enough to sometimes bypass high-level security in softwares and on online exchanges, and succeed in hacking people’s wallets.
No matter how secure you think your cryptocurrency wallet is, it is important to ensure that extra or all available steps are taken to enhance its security level, just like you would probably go the extra mile to ensure that the credit cards in your physical wallet are secure.
Cold or offline wallets are generally safer than hot or online wallets; however, if you are an active crypto trader, hot wallets are a better option because successful trading requires that traders be regularly online via hot wallets. This characteristic isn’t a feature of cold wallets, even though cold wallets are highly secure and can’t be as easily hacked as hot wallets.
Although hot wallets are more convenient to use, they aren’t the most secure types of wallets. Cold wallets, on the other hand, are much more secure and a great fit for storing larger amounts of cryptocurrency assets that won’t be used or touched for a definite or indefinite time period. If crypto assets are stored in cold wallets, but later have to be used for investing, trading, shopping, etc., they can always be transferred to hot wallets.
After selecting a cryptocurrency wallet that is aligned with your goals, it is important to consider the following tips which could help keep your crypto assets and wallet highly safe:
(1) Acquire many cryptocurrency wallets
We live in a time when it’s extremely important to be diverse—or diversify—instead of putting all our eggs in one basket. Acquiring a number of wallets and storing different amounts of crypto assets in each, is a great way to secure most of your total assets, especially if one or two of the wallets get compromised.
By having many wallets, it would be almost impossible to become bankrupt of cryptocurrencies if only one or two wallets are hacked, out of many. Preferably, you may want to save larger amounts of crypto assets in a combination of two or more hardware wallets, and keep the rest in smaller amounts spread across a number of different wallets.
(2) Back up your cryptocurrency wallets
Whether you decide to diversify your crypto savings or not, it’s important to enhance your cryptocurrency wallet security by backing it up just like files, documents, and photos are being widely backed up on computers.
The following information—including others, if available—should be regularly backed up in a secure local cloud: recent crypto addresses, PIN codes, usernames, passwords, and any important piece of information related to your wallet’s features.
Saving and backing up information would save you a ton of time and untold problems if you forget information like PIN codes, passwords, etc. Generally speaking, backing up can protect you from losses due to human errors, computer failures, or phone and computer theft which nobody can rule out with all certainty.
(3) Add more or all available security levels
Some cryptocurrency wallets have more or extra options that can be used to strengthen or tighten their security level. Here are some suggestions:
(a) Create a strong password and change it periodically
Although short passwords are easier to remember, when it comes to creating passwords for cryptocurrency wallets, it’s advisable to create a strong password of, if possible, not less than 16 characters long. It should consist of a mixture of lower- and upper-case letters, numbers, and punctuation marks. Avoid creating passwords that are recognizable English words and contain only letters.
(b) Use two-factor authentication (2FA)
Depending on the type of wallet you acquire, “two-factor authentication” may or may not be present, but most wallets likely have this feature. If your wallet enables or allows “two-factor authentication”, use it to further heighten your cryptocurrency wallet security.
Two-factor authentication is a double authentication method that works in different ways: a combination of both email/password and phone number is one way, while a combination of both username/password and an app like the Google Authenticator app is another way. Google Authenticator app provides a six-digit code that is changed every minute but is still unique to you.
(c) Encrypt your wallet
Encrypting your wallet may require some technical familiarity, so you may have to contact your wallet provider if you need information on how to encrypt your wallet. Encrypting a wallet—and important backups, if necessary—would enable you to protect your wallet with a passphrase and against dubious people who may attempt to withdraw your cryptos without your consent.
(4) Update your wallet software as often as possible
Whether they exist on your desktop or mobile phone, it’s important to ensure that you’re always using the latest versions of your wallets. Therefore, watch out for updates and immediately them whenever firms send out updates that contain security and stability fixes. By regularly updating your wallet software, it would have the latest security features that can help prevent minor and major problems.