To understand how to keep cryptocurrency safe, one needs to understand its nature. Cryptocurrency is not something material, like banknotes, bonds, or precious metals. It is a digital code on the blockchain, a database located on the Internet. When we talk about cryptocurrency storage, we are talking about information security. And it is this topic you need to start your crypto knowledge with, since the more popular cryptos become, the more people want to steal them.
💭 Are there any banks for cryptocurrency?
Initially, cryptocurrency originated as a kind of antagonist of banks. Its very purpose was to exclude banks from money circulation. Therefore, historically, banks did not like a new type of money. In particular, in 2018, the three largest US banks, JP Morgan, Bank of America and Citigroup, forbade their customers to buy cryptocurrency on exchanges using their bank cards.
But times are changing, and now the primary opponent of bitcoin, Jamie Dimon, says that JP Morgan is studying the blockchain and will soon launch its stable coin. Small banks in the USA, Canada, Estonia, and Switzerland receive licenses for crypto operations. In 2019, Zurich SEBA Bank AG, among other services, offered cryptocurrencies storing and issued a cryptocurrency bank card to its customers. More recently, in connection with the crisis caused by the coronavirus, the Italian Banco Sella launched a bitcoin trading service, acting as an intermediary in transactions — according to representatives of the bank, bitcoin can help the organization survive in the dire situation in which it found itself.
These steps are very revealing, and they show the positive trend of recent times when cryptocurrency is becoming more and more respectable money. Still, the main principle of keeping the cryptocurrency safe is an attentive attitude to all keys and passwords for wallets. If they are lost, no one will be able to give you access to your funds.
💭How to minimize risks when storing cryptocurrency?
🔹 Use cold storage.
Cryptocurrencies are stored in digital wallets, which can be cold or hot. Hot are the wallets of exchanges and cryptocurrency storage services. When using this type of wallet, you keep your coins in someone else’s wallet — the exchange’s one. If it is hacked, your savings will be lost. In the history of cryptocurrencies, this has happened many times. Store coins offline in a cold wallet. The safest kind of cold wallets is hardware ones because they are not installed on a computer, which means they cannot be infected with a virus or hacked. However, it is crucial not to lose this small device — you cannot restore access to money if you lose it.
🔹 Save the seed phrase and password!
This is the most important principle of owning a crypto wallet. For cryptocurrencies, the seed phrase and password are a pair of keys, private and public, that only you own. The seed phrase is a private key, a random set of words that you need to enter to restore access to your wallet in case your laptop or smartphone breaks. Everyone has heard about the importance of passwords a thousand times, but so far, many people use either one password for all applications and sites they are registered on or enter weak passwords, short passwords, etc. To generate a secure password, you can use special services. To save keys, you can use the so-called paper wallet. It is a printout of keys on paper, the storage of which must be taken very responsibly.
🔹 Remember the importance of basic security principles on a network.
When a cryptocurrency wallet is installed on your computer, it is especially important that the antivirus is turned on when browsing the Internet. Do not download files from any site you come to, don’t open emails from anyone, and if you’ve opened, don’t follow the link in the email if it seems to be suspicious. The same applies to the phone: do not install apps without first reading reviews. Be sure to use two-factor authentication, no one except you will be able to enter the password just generated, and therefore will not get access to the funds. Do not use other people’s devices: only your laptop, only personal phone. The same applies to Wi-Fi networks. It is very undesirable to use open public Wi-Fi networks since, through them, you can become the object of a hacker hack.
🔹 Do not keep all eggs in one basket.
Аnd this is the first rule of an investor. You should not upload all your savings into one wallet. The only exception is if you keep your hardware wallet in a bank cell. In all other cases, the funds should be divided. Having lost access to one wallet as a result of some emergency, you will still have funds in another.
🔹 Let only you and the closest people know about your crypto savings.
The fewer people know about your crypto wealth, the calmer your life will be. Do not write about the fact that you own significant amounts of cryptocurrency on social networks, do not attract the attention of unfamiliar people in personal conversations. Talking about the advantages of cryptocurrencies and inviting new users to crypto-economics is a useful and significant business, but shouting out about your money is dangerous. You can attract the attention of scammers or hackers or even dangerous criminals.
If all these requirements are met, you can be calm about your cryptocurrencies. Remember, cryptocurrency is the money of independent people. No one will keep and save your money for you, and it is only you who is responsible for them.
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