In centralized systems, it is the function of the controlling authority to safeguard our valuable monetary assets. However, cryptocurrencies work on a decentralized system and the onus lies with the individual users to ensure the safety of their currencies. Therefore, all digital coins are stored in a crypto wallet.
People can invest large sums of money into cryptocurrencies and lose most of it if their crypto wallets are not secure.
Hacking incidents involving Coincheck and BitGrail in 2018 are notable examples of this. However, such occurrences are still rare and it is still in the hands of the users to maintain the safety of their assets.
Therefore, below are five ways in which traders and investors can ensure the security of their wallets.
1. Keep a backup of the crypto wallet
Most of the electronic elements we use in the 21st century are hackable and destructable. In fact, it’s no surprise that we keep backups of our music, images, documents, and everthing else of importance. With cryptocurrencies, the backup process can get complicated. Crypto assets are based on a decentralized system and cannot depend on cloud or centralized services for backups. Even when they are stored using centralized services, getting hacked will defeat the purpose.
Therefore, it is essential to keep a backup of the private crypto wallet keys in an offline location.
If you have an HD wallet, keep the mnemonic phrase safe in multiple secure locations. This will prevent the hacker from accessing your wallet using just two elements.
2. Use the Most Secure Crypto Wallets
Despite keeping a backup, it is important that a user choose the most secure crypto wallet. Traders and investors should make sure that their crypto wallets are the best on the market. Having a renowned and trusted crypto wallet reduces its security issues significantly. This is due to the fact that reputable wallets offer enhanced security features. These include a PIN code trait, passphrase feature and even a 2-FA authentication process.
The security of a wallet is directly proportional to the number of security features it provides.
Therefore, any user should look out for the following features to enjoy a wallet with the most security:
- Traders should make sure that their crypto wallet has a convenient UI that makes using the wallet easy. When UI is complicated, users find it hard to apply all the security features to their crypto wallet.
- The wallet should allow users to keep control of their private keys. When the private keys are under the control of a third party, it becomes hard to safeguard the wallet.
- The wallet being used should possess a development community which is active and responds to the customer’s issues.
- The crypto wallet must demonstrate compatibility with different types of operating systems for maximum security.
- The wallet should have enhanced restore and backup features.
Based on these criteria, some of the most credible wallets in the market are:
- Hardware Wallets: Ledger Nano Sand Trezor
- Desktop wallet: Exodus and MetaMask
- Web Wallet: MyEtherWallet
- Mobile Wallet: Coinomi and Mycelium
3. Employ the Best Use Practices for crypto wallets
Like the digital realm, the crypto world is infused with trojans, bots, malware and other harmful elements. People exploit online wallets used for storing cryptocurrencies. This makes it mandatory to employ the safest practices while using them. Some of the standards steps that users can follow for the safety of their digital wallets include:
- Make use of an anti-malware and antivirus software on your laptop and desktop.
- Install a secure and strong firewall.
- While accessing the web wallets, make sure to check the URL of the site thoroughly to avoid phishing.
- Avoid additional phishing attacks by using the Punycode alert in the chrome extension.
- Never install unverified apps and software on the devices used for storing cryptocurrencies.
- Avoid using brain wallets.
- Ensure your passwords are hard and very difficult to guess, and store it in a secure location.
4. Use Crypto Wallets with Two-Factor Authentication
Crypto wallets offering two-factor authentication are the best in the market. Having 2FA means that anyone wanting to access your wallet would need login details as well as your phone. The phone number adds an extra layer of security as it is where the unique code is sent.
Users should keep in mind though, that 2-FA is not fail-safe. It means that anyone with the user email id and phone can bypass this authentication. Someone who manages to port your phone number to a separate device would also be able to access the wallet.
CTO of PolySwarm, Paul Makowski, has suggested the following 2FA options, as per their most to least security level:
- Hardware dongle: Further information about this is available at:https://landing.google.com/advancedprotection/
- An app within your phone which would prevent the syncing of your phone data and secrets in any place like the Google authenticator.
- A 2-FA using email.
- A 2-FA using SMS
5. Avoid using Public Wi-Fi for your Crypto wallet
Many places allow access to the public Wi-Fi, including cafes, libraries, hotels, airports, and more. The result is that it becomes convenient for people to use the online systems like crypto wallets anywhere. Such use of public Wi-Fi for online currency makes it easy for hackers to access the wallets. Criminals infiltrate computers which are connected on the public network.
The following are the risks of using public Wi-Fi:
- Wi-Fi sniffing
- Other attacks like Man-in-the-middle
Therefore, it is preferable for users to turn off their Wi-Fi when in public places. Doing so will disable the public Wi-Fi to search your network and make public connections. It’s also wise to carry a private Wi-fi dongle when traveling outside for access your crypto wallets. Another option is to use the Wi-Fi hotspot from your personal phone.
Cryptocurrencies offer a lucrative investment option for traders and investors. However, they come with their own set of risks when their online/offline wallets are not secure.
Therefore, users must follow the best industry practices and stringent safety steps to safeguard their crypto wallets.
Want the latest crypto news? Join our Telegram Channel