With great rewards comes great risk. And Bitcoin isn’t just the tour de force; It has enchanted the investing masses for over a decade now. Along with Bitcoin, cryptocurrencies account for the fastest-growing asset class in the world. And being intangible digital assets, cryptocurrencies call for robust security mechanisms and precautionary measures on the part of the investors to keep their crypto assets safe.
Crypto has attracted some of the biggest names from the corporate and financial world and transformed lives worldwide. Ever since the first Bitcoin was mined in 2009, the popularity of crypto assets continues to invoke adoption from across the globe and invite a flurry of uninvited hacks and attacks that can drain your wallet without you even knowing it.
Whether you are someone looking to dabble in this space for the first time or you are a seasoned veteran with many years of investing behind you, knowledge about keeping your crypto safe is essential. Let’s look at the various ways through which you can protect your crypto investments.
The Know-How on Keeping your Crypto Safe
Practice a Strict Level of Confidentiality
Essentially, the cornerstone of keeping your crypto safe is securing your private key. Much like you might keep your gold and jewelry under lock and key, your crypto assets also require a certain level of security, which comes in the form of crypto key information that should be kept confidential. This information may contain several of your wallet, exchange, and email-related passwords, as well as your private keys.
You are likely to have a public key and a private key for your crypto wallet, both of which have different functions. A public key is used to send crypto into a wallet, while a private key is used to access funds in a wallet and prove ownership of a digital asset. Many scams are born from unaware victims giving out this confidential information to fraudsters, which is why this is the most important aspect of keeping your crypto safe.
Generally, you would have a crypto exchange password as well as a 2FA (two-factor authentication) recovery code to log into your account on the exchange. You might also have software and hardware wallet passwords with their accompanying 2FA recovery codes, as well as passwords for the email accounts associated with all your crypto activity. While it may not be possible to retain all these passwords to memory, it is vital to keep this sensitive information away from prying eyes and in a secure location.
Steer Clear of Exchange Default Wallets
This proves to be one of the easiest options for newcomers to crypto since little effort and technical skill is required to adhere to this dictum. When people start trading on public exchanges with little to low level of security, they use the default wallets on the platform to store their crypto assets, which is extremely unsafe since your private key is being stored on their server. There are countless horror stories of people waking up to empty crypto wallets, and among these victims, many start with storing their assets on a default wallet. Thus, it is important not to take the easy way out with these breachable servers and look for more secure options. Let’s dig into that a little more.
Work with Reputable Names
Crypto is still a new phenomenon, which means many companies within the sphere are still finding their footing. Therefore, it is important to keep your valuable assets safe in a reputable crypto wallet and work exclusively with established brokerages and exchange platforms such as WazirX. To draw a parallel, you would never think about keeping your treasured jewelry in a no-name local vault, and the same should go for your digital assets.
Have an Eagle Eye for Potential Scams
Scammers are getting more creative than ever before, making it essential to learn how to identify and protect against them. Hackers often call you pretending to be a part of a reputable crypto organization to extract information about your wallet and then wipe it empty, so it is important always to be wary of out-of-the-blue phone calls asking for information.
Fake websites, applications, and giveaway offers are also easy to spot since they often use excessive marketing methods, have limited information about the people behind the organization, and promise enormous and guaranteed returns. Moreover, the advancement of technology is a double-edged sword as it is equally accessible for bad motives, in this case, hacking. Thus, having two-factor authentication and secure passwords is essential to keeping your crypto safe.
Cold storage vs. Hot wallets
Knowledge about the kinds of crypto wallets available in the market is vital, so let’s dive into some specifics. A cold wallet exists entirely offline, and the owner has to either write down the private address or purchase a physical device that securely stores their funds. While this helps avid investors keep track of their assets and is a secure way of storing them, it would be more time-consuming and expensive to recurrently transfer funds between a cryptocurrency exchange and a cold wallet.
On the other hand, a hot wallet is connected to the internet to facilitate easier access and the ability to trade other cryptos more conveniently. However, as you probably expect, the internet is the playground for cybercrime, making your wallet vulnerable to attacks and scams. Therefore, while both storage options have their advantages and disadvantages, it seems that cold storage might be the relatively safer option out of the two, especially for the holdings which you aren’t inclined to trade or swap in the near future. For the ones you look forward to selling off or trading, opt for an exchange with multiple security layers and other investor fund protection features.
Some quick Do’s and Don’ts
Now that we’ve covered the big points, let’s go over some quick things to keep in mind to keep your crypto safe:
- Don’t put a target on your back by bragging about your crypto gains online since it might attract hackers
- Do check every URL associated with the websites you visit to trade or store your crypto assets
- Don’t succumb to pressure and give in to scammers who might be trying to extract information from you
- Do research every exchange platform or provider you work with
- Don’t be unaware of how your crypto is being used in transactions
Bottom Line
Crypto is an exciting thing to dive into, and it has proven itself as a great investment in the last couple of years. However, it is important not to get swept up in this excitement and take decisions that endanger your money. This article is intended to educate you about keeping your crypto safe. Confidentiality and awareness are key in crypto, so ensure that you are keeping your information secure and only taking well-informed and thoroughly researched decisions.
Also read | How to select the best platform to buy Bitcoin and other crypto in India?