3 Tips to Make Your Crypto Safer
When it comes to cryptocurrency, keeping your digital assets safe is just as important as choosing the right coins to purchase. Newcomers to the cryptocurrency space are more likely to become victims of hackers, thieves and scammers while they are looking to make beneficial trades. Thankfully, there are a number of steps you can take in order to minimize the risk of losing your crypto funds.
- Do Not Hold Your Funds on Exchanges
The most common mistake among newcomers is that they tend to keep their digital assets on cryptocurrency exchanges. While this truly is the easiest way, as these wallets are seamlessly integrated into the exchange user interface, it is one of the most unsafe ways to store your coins. In the crypto community, there is a common saying which you should always remember: “If you don’t own the private key, you don’t own the coins”.
When you send your coins to an exchange wallet, your funds are at the mercy of the exchange. If they get hacked, raided by law enforcement or simply pull off a scam, you might not ever have the opportunity to get “your” coins back. Even though most exchanges put a lot of effort into securing the assets in their wallets, hacks are still a common occurrence. Just in the last two weeks, both Bithumb and Coinrail had funds stolen from them by hackers.
For this reason, you should avoid holding large amounts of cryptocurrency on an exchange for a prolonged period of time. If you hold an amount of cryptocurrency that is very significant to you, consider investing in a hardware wallet offered by companies such as Ledger, Trezor and KeepKey. When purchasing hardware wallets, do not buy them from marketplaces such as eBay but only use retailers that are approved by the wallet’s manufacturer.
- Remember Your Private Keys and Make Backups
While cryptocurrency can give you an unprecedented level of control over your finances, this is accompanied by a much greater amount of responsibility for your funds. Forgetting your password, pin code or losing your private keys may result in you never seeing your coins again.
We are all spoiled by the ‘Forgotten Password’ option that almost all websites offer nowadays. However, when it comes to crypto wallets, there is no such option, so be sure to make copies and back-ups. Print a hard copy of your private key and password and store it at a safe location, e.g. a safe. If you ever lose your key or forget the password, you will be more than glad that you have taken these precautionary measures.
- Use Two-Factor Authentication
If you want to trade with your digital assets, you will have to transfer your funds to an exchange. During this time, you can ensure a greater safety of your investment by opting in for a multiple level authentication, usually referred to as Two-Factor Authentication.
The first factor is your password, while codes generated by an application such as Google Authenticator are the most common second factor. Two-Factor Authentication will protect you from hacking attacks targeted specifically at your account but not from the attacks targeted at the wallets of the exchange itself.