Investors who wish to start a career in trading cryptocurrencies will find that one of the most important investments they will need to include is to ensure the safety of their digital coins. While the safety of cryptocurrency is often done with proof of work vs proof of stake, it’s not immune to external threats that can range from hacking, extortion, and other malicious schemes.
To avoid incurring troubles, here are some ways on how you can keep your cryptocurrency safe:
1. Invest in different wallet types
One of the most effective ways of keeping cryptocurrency safe is storing them in different places so that a single breach won’t be able to take all of your digital coins all at once.
Because digital coins don’t have a physical form, many experts believe that the best way to store your investments is virtually. A cryptocurrency wallet is a device that contains a private key and a public address. The private key is used by the holder to access their wallet, whereas a public address is provided to other crypto coin users to receive funds, which may be provided via SMS or other verification forms.
These details are all provided to enable investors to become their own banks. With that being said, there are a number of different cryptocurrency wallets available on the market. Their functions, advantages, and prices vary. Some of these include:
- Hot wallet
The first type of wallet is called a hot wallet. It is an online wallet that allows people to store their crypto coins. This is usually meant for investors who more or less wish to use their digital coins to purchase items or engage in various transactions. These are called hot because they are located on the Internet, where they can be accessed by anyone who has the security passcodes.
- Cold wallet
The second type of wallet is called a cold wallet. Unlike the hot wallet, it’s a storage unit that’s not connected to the Internet and is therefore offline. This is to prevent online malicious attacks from external factors, which can range from hackers, unauthorized personnel, and other factors that can affect your account’s security. People who use cold wallets usually intend to store their coins for a long period of time. Just make sure that you protect your security passcodes to avoid breaches.
- Hardware wallet
A hardware wallet is a kind of cold wallet that’s encased in a physical device. This kind of wallet helps store the investor’s private keys in a secure hardware device. Most hardware wallets also include features that allow users to execute their series of transactions on the device, giving them the option of mobility during work. However, because it’s in physical form, it’s going to be a problem once it gets stolen or lost.
- Crypto wallet
The crypto wallet is limiting in a sense that it only stores a specific type of cryptocurrency, including the Bitcoin wallet and the Ethereum wallet.
It’s important to diversify the kind of wallets you use so that you don’t lose all of your cryptocurrencies at the same time. It works in the same logic as you putting your money in the bank, a physical wallet, a debit card, and others. The farther away your wallet is from the Internet, the safer it is.
2. Back up your private keys
Because most cryptocurrencies don’t come with online banking features that offer reset options, users are expected to use the set of private keys that often come with the wallets they invested in. Some of these keys are in physical form to provide you immediate access to the device such as hardware wallets.
To avoid losing your only access to your investment, consider making copies of your keys and store them in places that are safe from physical damage. Aside from making copies, it also helps to store your devices safely to prevent it from being stolen.
3. Invest in different crypto coins
Another practical tactic in avoiding unnecessary loss is to invest in more than one type of crypto coin. Considering that there are various digital coins available, investors should expand their options by not limiting themselves to just one company. That way, if they ever lose a certain amount of investment, they won’t have to worry about starting from scratch all over again because they have other investments that can help them rebound from the loss.
4. Don’t trade in public Wi-Fi networks
Certain investors may store a portion of their cryptocurrency in hot wallets so they can use them for various transactions. However, if you have a significant amount of digital coins in your hot wallet, make sure to access them only in secure and private networks. The reason for this is because public Wi-Fi networks are prone to major security flaws that can inadvertently reveal your private information to third parties.
5. Beware of phishing
Aside from trading only using secure networks, make sure that the emails from your trading platforms are legitimate. Always double-check the email address before clicking any link or putting your passcode in any device.
6. Avoid sending the wrong cryptocurrency to the wrong wallet
While investing in different currencies and using different wallets are effective ways to keep your cryptocurrencies safe, users who are not careful about their data can potentially lose some of the assets they work hard for. The reason for this is certain wallets are unable to accommodate certain crypto coins that have different codes embedded in them. So, if you’re using an Ethereum wallet, only store Ethereum there to avoid losing any of your investments.
With so many technological advancements available today, one can expect that there are different ways of keeping your assets safe, especially cryptocurrency. While trading crypto coins is generally safe, learning to invest in different wallets and adapting other security measures can prevent you from losing your assets in the future.
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