One of the most advantageous aspects of using cryptocurrency is the level of security afforded to users. However, we have all seen the countless amount of reports – horror stories, where investors and traders lose the entirety of their crypto portfolios.
From improper private key management, hacked exchanges, and phishing scams, there are plenty of ways bad actors can go about attacking your savings and potentially steal them. It is critical one does everything possible to follow proper security practices when dealing with crypto. YOU, and only you, can guarantee the safety of your digital holdings.
Continue reading below for a comprehensive list of top tips you absolutely must know to ensure your utmost security when in crypto!
#1. Multiple Eggs, Multiple Baskets
It is generally a bad idea to put all of your eggs (crypto, in this case) in one basket (wallet) – having multiple eggs is a great start, but this calls for multiple baskets. Not only is this a great practice when it comes to investing in digital assets, but also when it comes to security. You should never put your entire cryptocurrency stack in a single wallet, even if you’re using hot or cold storage.
The best way to go about it is to use multiple cryptocurrency wallets and distribute your savings in a way that won’t affect you so much if one of them is compromised.
The use of cold storage devices is a strong recommendation. Cold storage wallets are not actively connected to the internet and are nearly impossible to compromise unless you fall victim to a phishing scam. The most popular brands of hardware/cold storage wallets are Trezor and Ledger.
#2. Keep Your Holdings Private
As the saying goes about the old-fashioned $5 wrench attack – somebody can threaten your life with a wrench that costs $5, and that might be all it takes to get you to give him your private keys. While you can use technologies such as multi-signature wallets and so forth, the attacker won’t care in most cases.
It is paramount not to brag, flaunt, or boast about your cryptocurrency holdings to anyone. Nobody needs to know exactly how many Bitcoin (BTC) or Ethereum (ETH) you own – or that you own any at all.
Keep this knowledge to yourself, and there becomes one less way to target your cryptocurrency, thus, ensuring your safety is as close to fool-proof as can be.
#3 – Avoid Storing Large Volumes of Cryptocurrency on an Exchange
While many exchanges currently leading the market are considered safe, and some even have insurance, it is never a wise idea to leave the bulk of your crypto on one.
As the saying goes: not your keys, not your crypto! You should never keep more than what you need to trade with on exchanges because if it gets hacked, your money is as good as gone.
Unfortunately, we have seen plenty of once big-name crypto-exchanges fall victim to hackers, and it is wise to minimize any unnecessary risk by storing your cryptocurrency in a wallet where you retain ownership of the private keys.
#4 – Beware of Phishing Scams
Phishing scams are growing in popularity over the past couple of years as more and more people get involved in the cryptocurrency field. There are many ways the security of your device can become compromised. Some of these ways range from fraudulent YouTube ads, fake applications, and even phishing domains that mimic popular existing websites.
Once you send your private key to a phishing scam website, you can rest assured that your cryptocurrency holdings will be gone within minutes. The worst thing is that these are usually very elaborate, and even people with experience might fall for them as the details are sometimes so hard to spot – they tend to look exactly like the original.
That’s why it is critical to never websites you don’t trust or those that fall out of the scope of your computer’s protection. Double-check the applications you download to be 100% sure that they are the official ones and not fake.
#5 – Backup Your Wallets
Always store your wallet’s private keys offline – this way, they can’t be accessed by hackers. It’s also paramount to have backups of these private keys, which are also stored offline.
We highly recommend that you store a backup of your keys outside of your home as well – this way, you will have access to them in case of an incident such as a fire, earthquake, or whatever else might jeopardize the integrity of your home.
Although they might be sound surprising, a recommended place to store your private key would be your bank’s safe.
#6 – Never Use Public Wi-Fi
Turn off your auto-updates for both applications and the device operating system (OS). Make sure you stay up to date, and in case a security breach is discovered – you better allow some time before updating.
Always use a 2-Factor Authenticator (2FA) when applicable. A 2FA is a timely changing code – the most popular app in this field is Google Authenticator. This second layer of security will require a code for every login to your wallet or account, and it ensures that without physical access to your device, making it impossible to log in.
Password-protect your device. In case that it gets stolen, your 2FA app will be out of reach. Never auto-save crypto-related passwords when offered by Google Chrome and any other password-saving tools, and protect your PC and phone with an up-to-date antivirus tool.
One more thing you can consider if you’re heavily into trading is purchasing another mobile device or PC that you will use only for cryptocurrency purposes. This device should be clean of any applications, as any app with ill-considered permissions can become a target point for hackers and a potential breach.