5 Proven Ways to Keep Cryptocurrencies Secure
Depending on who you talk to, cryptocurrency is either the most secure form of currency ever created or the most vulnerable. In fact, there are vastly differing opinions in the media and blogosphere about just how safe it really is.
Its decentralized nature is a solid reason why it is more secure than fiat currencies. The entire system is powered by P2P as opposed to being overseen by conventional financial institutions. At the same time, that means there’s a lot of room for shenanigans.
All that aside, it is possible to keep cryptocurrencies safe, provided one has the know-how. Here are some ways it can be done, not just on an individual level but also across the entire industry.
1. Secure the Wallet
Cryptocurrencies are kept in something called a wallet, which is essentially a secure, digital account. It’s a lot like a bank account in function, but riskier when it comes to keeping funds safe.
All wallets are encrypted and accessible using only the related access key. You can store a wallet on a variety of devices, including a cellphone, computer or even a hardware drive. If you lose the access key, you’ll also lose all funds stored within. A recovery key — called a seed — is also provided, which is a failsafe in case you lose the primary key or password.
Just like you don’t want to lose your real wallet, you also don’t want to lose your crypto wallet or access to it. Perhaps the best and most secure kind to have is a hardware wallet, like the Ledger Nano devices. All data is stored securely on the drive, and it remains offline inaccessible to potential hackers or thieves.
2. Minimize Exchange Use
Similar to fiat currencies, you must convert crypto coins or tokens into real money if you want to get any use out of them. More businesses are accepting popular crypto such as Bitcoin, but more than likely, you’ll need to convert.
To do this, you use something called a coin or crypto exchange. The funds you want to convert are sent to your exchange account, where they are traded in for other forms of currency.
Interestingly, there are a lot of people that treat their exchange accounts like a bank. They will transfer large sums of crypto to their account for safekeeping. This is not good, because exchange services are constantly being hacked.
When you store funds in an exchange, the money is generally kept in a separate wallet, and not one attached to you. If the funds are stolen or lost, they’re gone forever. People have lost millions of dollars from high-profile hacks on crypto exchanges.
Only use exchanges to convert funds, and when you do transfer money, make sure you either convert it or send it to your wallet immediately. The same is true if you do the opposite and convert fiat currency to crypto for investing.
3. Mind the Scams
Once you’ve paid another user or service in crypto, the money is gone. This is not unlike dealing or paying with cash, which inadvertently supports scammers and thieves in various circumstances. If you hand someone money before services are rendered, they can walk away — and it’s the same for crypto payments.
Never share your private or secure access keys with anyone. Scammers may also use conventional phishing techniques via email or fake websites to abscond sensitive information, such as a wallet access key. You see this kind of thing a lot with high-ticket items like lottery winnings. Scammers will try to convince winners they need to hand over their lottery ticket or sign it away, resulting in the loss of earned money.
4. Avoid Using Public Wi-Fi
Free public Wi-Fi is excellent when you need internet access in a pinch, but it should never be used to facilitate secure or private transactions.
Open networks can be easily rigged to install malicious software or snoop data being exchanged across it. That means never accessing your crypto wallet, sharing sensitive information, or browsing exchanges on a public Wi-Fi.
Avoid them altogether when conducting or dealing with cryptocurrency-based actions or events. You should not use them for any sensitive data-based activity.
5. Know the Currency
Bitcoin is the most popular form of cryptocurrency, but there are many more out there, often referred to as “altcoins.” From Ethereum to Monero and beyond, it’s important that you not only understand what currencies you’re investing in but also how they operate. Not all are created equal, and they have varying mechanics when it comes to storing, spending and even owning them.
One of the easiest ways to lose your money is due to a lack of understanding. The simplest example would be if you didn’t know the difference between a 10-dollar bill or a hundred-dollar bill. It would be easy for others to take advantage of that fact.
If you’re going to invest in cryptocurrency, then make sure you take the time to understand each platform and how it operates. Stay up-to-date on current values, particularly because market volatility is much higher when dealing with cryptocurrencies.
The first pizzas that were purchased with Bitcoin are now worth $82 million. Let that sink in and imagine losing that much money or more just because you weren’t aware of the current market.
Get to know the currencies you invest in, as well as the mechanics of each platform. Bitcoin mining is no longer lucrative in terms of earning the currency. If you spend money trying to mine or develop a system, you’re likely going to be wasting your time.
Keep Your Crypto-Funds Secure
Be smart with your digital wallet. If you mind these tips, you should be able to keep your crypto funds secure.
