How to Keep Your Cryptocurrency Safe

Author: Vinny Lingam / Source: wikiHow

1 Transfer your cryptocurrency to a wallet as soon as possible. When you buy cryptocurrency, you have the option of simply leaving it in your exchange account. However, cryptocurrency exchanges are major targets for hackers. Any cryptocurrency left in an exchange account is extremely vulnerable to theft.
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- While exchange accounts may be the most convenient, they are also the least secure. With cryptocurrency, the basic rule is that the more convenient it is to access your cryptocurrency, the less secure it is.
- Generally, your cryptocurrency should be okay if you leave it in your exchange account for a few days. Any longer than that, and you should find a more secure location.
2 Buy hardware or paper wallets to hold cryptocurrency long-term. Hardware wallets are devices that are designed for the sole purpose of storing cryptocurrency. Since they aren’t online, they aren’t vulnerable to hackers. Paper wallets are likewise invulnerable to hackers.^[3]
- Expect a hardware wallet to cost you a minimum of $100. The expense may not be worth it if you have a small amount of cryptocurrency. However, if you have cryptocurrency worth thousands of dollars, a hardware wallet may be your best option.
- A paper wallet generates QR codes that you print. Before you create a paper wallet, make sure your computer and the network it’s on are free of malware or spyware. Ideally, use a brand-new computer that has never been used for any other purpose or been connected to the internet before.
- While hardware and paper wallets are the least convenient methods for holding your cryptocurrency, they are also the most secure. These wallets are ideal if you don’t intend to spend cryptocurrency, but are keeping it as an investment.
3 Evaluate the security of online wallets carefully. A strong online wallet has an active development team, robust backup and security features, and is compatible with multiple operating systems. The wallet also should allow you to maintain control of your private keys.^[4]
- Anyone who has access to your private keys can move your cryptocurrency. Avoid online wallets that require you to give up control of your private key. Cryptocurrency wallets are not banks, and are not subject to the same regulations. If the wallet company loses your cryptocurrency, you may have no recourse.
- You may also want to look into the background of people handling security for the wallet company. Search people’s names online to learn more about their reputation in the industry.
4 Keep only small amounts in less secure wallets. Any wallet you can access online, including web wallets and mobile wallets, are more vulnerable to hacking than hardware or paper wallets. Essentially, you trade convenience for security. Don’t put more cryptocurrency in these wallets than you can afford to lose.^[5]
- If you plan to use cryptocurrency both for regular transactions and for investment purposes, it may be best to keep the bulk of your cryptocurrency in a hardware or paper wallet, and a small percentage of it in a web or mobile wallet.
- Think of this in terms of keeping your money in the bank and a small amount of cash on your person. Just as you wouldn’t walk around with your life’s savings in cash in your pocket, don’t put all of your cryptocurrency in an online wallet.
5 Try a multi-signature wallet to give someone else access. Multi-signature wallets require more than one person to enter a separate passcode or phrase to enable a transaction. This provides the ultimate in security, but should only be used if there is someone you trust with access to your cryptocurrency.^[6]
- For example, if you are married, both you and your spouse could be signatories on a multi-signature wallet. You would both have to enter your separate passcode before either of you could complete a transaction.
- Multi-signature wallets also are ideal for businesses that have cryptocurrency wallets. At least 2 officers or managers in the company would have to sign off on a transaction before it could be completed, helping prevent embezzlement of company funds.