May The Force Be With You, And Your Wallets Too
Hard wallets and why you should get one
“Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time” — Johann Wolfgang von Goethe
Blockchains are radically changing the global financial landscape and placing power and autonomy into the hands of people all over the world. As blockchains become more widely used and adopted, they will inherently become more sophisticated giving hackers and cybercriminals more incentive to steal digital assets. We, and we alone are responsible for keeping our funds safe during this exciting time of innovation and disruption.
Crypto Exchanges
Cryptocurrency is becoming a business and household term, offering a currency alternative to government-backed currencies that have been used on a daily basis for years. We frequently see arguments for both sides. For example, digital currencies are easier, safer, and offer more ownership and privacy compared to the US dollar. Cryptocurrencies offer a unique investment opporutnity for risk-seeking investors due to the price volatility. The value of Bitcoin and other cryptocurrencies can easily double and/or triple in value in a blink, or can just as easily drop to zero. If you have decided to invest in the decentralized currencies of the world, it is important to keep your assets secured and safe. The best ways to purchase cryptocurrencies are through online exchanges such as Binance, Coinbase, GDAX, and many, many others. While exchanges are popular and provide simple, easy purchasing for investors, many questions still swarm around their security and availability. Exchanges and online wallet providers have shown to be super targets for hackers.
Cryptocurrency exchanges are online platforms in which you can exchange digital assets based on the market value of the said asset. Exchanges are not wallets or wallet brokerages. When you hold your cryptocurrencies in an online exchange, you technically own them, but you don’t have full control over them. You can achieve full control by holding your cryptocurrencies in a private wallet, so in the event that an exchange becomes compromised or unavailable, you don’t have to say goodbye to your money. There are two types of wallets, software (online, phone and desktop) and hardware (offline, USB and paper). The less connected your wallet is to the internet the safer it is.
Exchange Security and Availability Concerns
On August 23, 2019, Coindesk published that crypto exchanges were facing troubles with some disruption. The article cited; “Problems with Amazon’s cloud service, AWS, are disrupting services at some cryptocurrency exchanges on Friday.” You can read the full publication here.
This isn’t the only occurrence of outages as Coinbase, Binance, GDAX, and others have had several over the last year. During outages, users cannot access their funds, make trades, or purchase cryptocurrency. Platform outages have been known to occur during times of high volume and activity, preventing users from being able to take any action. For investors, this is their worst nightmare come true. Offline wallets offer a secure and safe solution to keeping your cryptocurrency where it needs to be… with you.
Keeping Crypto Safe
The technology available to keep digital assets safe is rapidly growing to meet the demand we are facing. For the purpose of long-term storage and keeping funds secure, hardware wallets should be a part of your crypto investor package.
Hardware wallets are a crypto wallet which stores your private keys in a secure physical device. This is often some sort of USB device or something similar. The main reason for utilizing these is security. They are much more secure than standard operating systems used in software wallets.
Offline wallets such as Ledger Nano S and Trezor store all of your wallet keys behind multiple layers of security and have proven to be the best way to keep your crypto safe. While it is acceptable to store a small amount of crypto on exchanges and online wallets in order to complete transactions and make trades, the safest place to store the majority of your crypto is in an offline wallet or paper wallet. Hard wallets are never connected to the internet minimizing the probability of a hacker gaining access to your crypto. Hard wallets aren’t foolproof. They can be lost which means all access to the cryptocurrency stored in them would be lost, in the event, they are not backed up.
Trezor isn’t a full buying and selling platform like Coinbase and is simply a place to store your coins. It is a physical device that plugs into your computer, tablet, or phone to access your coins. It works with multiple currencies and works as a password manager, two-factor authentication device and other useful features.
Ledger Nano S is an independently certified hardware wallet built around a secure chip that ensures optimal security. This product is fully certified by ANSSI, the French cybersecurity agency. Your assets remain safe even if you lose your device. A confidential recovery phrase backs up your device allowing your accounts to be easily restored on a Ledger device.
Some other security measures you can take to keep your crypto safe include removing your personal details from public view, increased phone plan security for software wallets hosted on your device, using two-factor authentication for all accounts, using a password manager, and adding passwords to your phone and computer.
The main purpose of cryptocurrency as a decentralized currency is to give the people the power to control and manage their own money. While digital wallets give us the control we are looking for, they are still connected to the internet, making our money susceptible to hackers. Control your wallet, control your crypto, control your money.
