With the cryptocurrency market booming at an unprecedented rate, it is now more important than ever for crypto investors to safeguard their assets. Ironically, cryptocurrency’s greatest strength also forms the basis for one of its largest vulnerabilities – security.
The unregulated nature of the crypto industry has allowed the market for Bitcoin, Ethereum, and a variety of other cryptos to be propelled into the stratosphere. Previously, the anonymity and ease of transfer of funds made crypto a popular choice for individuals living on the fringes of society.
Deep web users could make and pay for illegal transactions without having to worry about being tracked by the authorities. Unfortunately, the sword cuts both ways and this has given rise to dozens of hack attacks and digital heists.
The absence of government oversight means that users are often not privy to the inner working of crypto exchanges. An otherwise profitable company could actually be running at a major loss without any indication.
This highlights the importance of staying safe when transacting in Bitcoins and other cryptocurrencies – which is why, we’ve prepared a guide to help you protect your crypto assets.
Start of by:
1. Dealing with reputable exchanges
The MT Gox collapse is a prime example of the risk inherent in the crypto market. For several years prior to becoming insolvent, MT Gox was regularly hacked by thieves who stole Bitcoin on a small scale.
Finally, in 2014 it was discovered that a full-scale hack was conducted which resulted in approximately 850,000 BTC being lost/stolen – which comes up to $470 million in losses. Note that this was a time when Bitcoins were valued at about $9,000 per BTC.
With dozens of crypto exchanges available on the market, choosing the right exchange may appear to be overwhelming at first. Fortunately, in today’s hyper-connected environment, a little research goes a long way.
Reputable exchanges can easily be tracked down based on reviews and their performance. Given the competitive nature of the crypto industry, many exchanges are also keen to safeguard their clientele’s interests in order to stand out from the crowd.
2. Securing your crypto storage
As any crypto enthusiast knows, cryptocurrencies are stored on electronic wallets or e-wallets. In actuality, e-wallets do not actually store crypto, rather the keys that allow a user to gain access to their cryptos.
E-wallets are divided into two categories; the first being hot wallets and the second; cold wallets. Hot wallets are usually supplied by a service provider who stores the crypto keys on a server online.
Meanwhile, cold wallets are physical devices such as hard disks, pen drives, or even pieces of paper that record the crypto encryption keys.
Hot wallets have the advantage of allowing a user quick access to their crypto with minimal fuss. Unfortunately, they are the most vulnerable to hack attacks and allow hackers to gain easy access to your cryptocurrencies.
Cold wallets, on the other hand, are bulky and unwieldy to use. However, they do have the benefit of allowing you to literally secure your cryptocurrency physically. They are the most secure methods of storage but losing your cold wallet can make it impossible to regain access to your crypto.
The best course of action would be to split your cryptocurrency holdings between that of a hot wallet and a cold wallet. Hot wallets can be used to store limited amounts of crypto for trading/other purposes whereas a cold wallet can be used to store the bulk of your assets safely.
Click here to learn more about crypto wallets in this article of Tezro: blog.tezro.com/what-is-cryptocurrency-wallet
3. Regularly change your passwords
Passwords are most definitely a pain but it’s essential that you regularly keep them updated. Using strong passwords that consist of upper and lower-case alphabets, numbers, and symbols will help keep hackers away.
Forget about using your mom’s name or birthdays for your password. Hackers have been known to make use of social engineering to crack passwords. Thus, this is why it’s better if random numbers and phrases are used when creating a new password.
4. Backup your cryptocurrency keys
While losing your cold wallet may be inconvenient, forgetting to backup your crypto passwords is much more of a nightmare. Have a series of backup keys available for use in case of an emergency.
Next, store these backups in a safe or fixed deposit box (if you really want to be safe). While it may seem like overkill, you’ll be thankful to have a backup available if you happen to lose your cold wallets.
Never forget that it’s always better to be safe than sorry. Keep your crypto assets locked away and secure at all times to protect yourself from any painful losses.