Security should always be top of your agenda when dealing with any currency, but if you’re new to the crypto community, it’s possible that you’re unaware of some of the security risks. Many of these risks already exist when dealing with traditional currency, but since we’ve been taking precautions against these risks for so long it has become second nature to most of us – it’s easy to let our guard down.
Would-be thieves know this, and they thrive on it.
There will always be people looking to steal from unsuspecting individuals, but don’t worry, with a little basic knowledge and by adopting few good habits, we can ensure our funds have the best possible protection.
If you’re dealing with cryptocurrency, you’re going to need to be comfortable using wallets, so it’s best to understand them before you get stuck in. Wallets fall into two categories ‘hot’ and ‘cold.’
Usually, hot wallets are used for short-term storage and daily use of crypto. Cold wallets are used for storing large amounts of funds over an extended period. It is probably easiest to think of them as a regular wallet and a savings account; you wouldn’t keep your savings in your wallet, but you might make a withdrawal and carry those funds on your person for a day of shopping. The main difference is that the currency we keep in these wallets is entirely digital.
There are five kinds of wallet all have different advantages and risks.
Hot: Desktop, Mobile, online.
Cold: Paper, hardware.
Most of the security issues with hot wallet are with hackers, malicious software, or phishing sites all looking to steal your details.
Cold wallets, being offline, are considered safer, but these can be lost, damaged, and physically stolen.
For more information on wallets check out our article ‘Wallets Explained‘.
Keeping Your Funds Safe
The first thing you need to understand is the difference between your public and private keys. Your public key is your address; you provide it so that others can send you tokens. Your private key is exactly as the name implies. It is for your eyes only.
Never give your private key to anyone, or you will lose your funds.
Always check that you are on the correct website when using online wallets. You can do this by looking for the green lettering and https in the URL. (Top left of your screen)
Keep your private key on an offline device like a pen drive and avoid saving it to any cloud storage.
If you have an old phone or laptop, you can do a clean system install on them and use them to access your hot wallets. This is almost as secure as cold storage provided you don’t use the device for anything else.
NB: Never keep your crypto on an exchange. The sheer volume of assets being traded makes them an attractive target for hackers.
Cold wallets may be offline, but you should still exercise caution when using them. Protect them from damage.
If possible use a hardware wallet like a Ledger S Nano or Trezor.
Hide your paper/hardware wallets. A safe or lock box is best, but at the bare minimum keep them out of sight.
Fold paper wallets — a seemingly blank piece of paper doesn’t attract prying eyes like a QR code, or a private key.
It might seem ideal but don’t try to commit your private key to memory, if you forget it you won’t be able to access your funds.
Don’t brag about your crypto-investments
Nobody else needs to know. Security is your responsibility and talking about your assets compromises that security. It’s an unnecessary risk.
Michael is an English and Creative writing graduate of Liverpool John Moore’s University, a former editor of several magazines, and a crypto-currency enthusiast. He is mostly interested in crypto-legislation and the potential of decentralized technology to change the world.