How many times have you heard of cryptocurrency exchanges, wallets, and individual investors getting hacked? It's quite scary isn't it?
The truth is, you're risking your investments in this volatile market. And, let's be honest, the last thing you want is a hacker taking all of your hard-earned investments. That would be horrible.
So, if you're a beginner cryptocurrency investor or you just don't have a security mindset, you need to get one right now!
So, you might be asking, "how do I store my Cryptocurrency?". Simply make it your priority of course! Some ways of storing your cryptocurrency are: making backups, adding extra layers of security, and doing proper research on services you utilize on your behalf for cryptocurrency.
Ultimately, if you read this guide, you will have the fundamental knowledge and skillset, when it comes to securing your cryptocurrencies. Do not leave your coins on any exchange site, we have seen it happen to often that sites will get hacked and coins are lost. Exchange sites are fine to use as long as you make sure to withdraw to a wallet where you control the private key information.
Different type of Cryptocurrency Wallets
Before we get all "security mumbo jumbo" on you, you obviously need to have an foundation of the different types of cryptocurrency wallets there are. This is so you can make the best educated decision and feel confident with your type of wallet you've just chose.
You might be wondering what exactly a cryptocurrency wallet is. Simply put, it's a form of digital storage. Within this digital storage, you can secure your cryptocurrency in it.
If this still doesn't make sense, then think of it this way..
With fiat cash you need a wallet to store your money. Some people choose a normal leather wallet, while other people choose to put their money into securer type of storage such as safes.
This is the same concept with cryptocurrency. You can choose to put your cryptocurrency in a wallet or "bank". However, cryptocurrency "safes" are essentially cold storage devices, but we will get to that later.
With this said, mostly every type of cryptocurrency has a form of wallet. Now, there are 5 different cryptocurrency wallets we are going to go over, when figuring out how to store your cryptocurrencies the safe way. Ofcourse, each wallet has their own pros and cons.
The different types of cryptocurrency wallets are:
- check Desktop wallets
- check Mobile wallets
- check Hardware wallets
- check Internet wallets
- check Paper Wallets
Desktop Wallets
Do you find yourself getting infected by viruses all the time? If so, a desktop wallet probably isn't right for you. However, if you trust in your Internet security practices, then you just might have an advantage, with the desktop wallet.
This is because you own the wallet completely and don't need to trust any third party for securing your funds. There are no percentages charged or anything like that. You own your wallet and you are in control.
Furthermore, you are not at risk for getting hacked through an online exchange. This is because to get hacked, they would have to individually attack your computer.
Lastly, you're limited towards the devices you use to access your funds. This is a great security barrier, but may be inefficent towards some people who use different devices each day and need to access their cryptocurrencies.
So, now you can see why we would recommend this wallet to the more secure type of people.
Mobile Wallets
If you plan to adopt a lot of cryptocurrencies latest innovations or just like portability in general, then you probably should adopt some type of mobile wallet. This is because you can can carry your mobile wallet with you at all times, can send money to friends and family extremely fast whenever you need too, and use whatever cool features your cryptocurrency wallet has in store.
Furthermore, if you are shopping at a store or an area that accepts cryptocurrency then you can scan your phone for a easy transaction. You wouldn't be able to do that with a desktop wallet!
However, mobile wallets are really complex.
These particular wallets are split into two categories.
- checklocal application: a new wallet that will work similarly to the desktop wallet expect on your phone.
- checkweb application: app created by your web wallet to make it easier and more accessible which allows you to use your mobile device as a compatible platform.
With mobile wallet, you can still lose access to your account by hackers or personal fault. An example of this is social engineering (talking you into giving valuable information for him or her to confiscate your account).
If a hacker social engineers your phone service provider, they could essentially steal your private keys.
Also, if you lose your phone without backing up your passwords and wallet you can lose it forever.
Hardware Wallets
One of the safest options to store your crypto currency. It is a device that is dedicated to storing your private key and other information to keep your coins safe. The two main wallets are the Trezor and Ledger wallets.
However this option can be fairly expensive for users who don’t hold many coins, it can cost a upwards of $200 for these devices. ( Some cheaper options do exist ) This is for users who do not need daily access to their coins and are investing in long term.
It also can be very inconvenient for some people, the item needs to be shipped to your house and because of the popularity it can take a long time to actually reach you. Just like the desktop wallets, you do not need to put your faith in any 3rd party companies and can regulate your own security for keeping the coins safe.
Paper Wallets
A paper wallet is a literal piece of paper that has a QR code of your bitcoin address and a code for your private key. Wallets are used to sign the transactions so if you are not sending any bitcoins you don’t need to even have a wallet you only need your private key which is the most valuable information.
Whenever you do want to send money, you can simply download a wallet and then upload your private key information to actually access your account and make transactions. Cyber attacks are useless when you have a paper wallet, and so this can be a very good option if you have back ups of the paper and can hide it in a safe place.
Online Wallets
These wallets are controlled by a third party system in which they store your private keys but make it easily accessible for you to use. It is online so it is compatible whenever you are connected to the internet and is able to go across platforms.
You don’t need to be using the same device or be in the same location, you can access your account whenever you are able to use the internet. The downside to this is that the company running the website has control of your private keys and if hacked you could potentially lose all of your coins.
It is basically like having a bank account that your parents signed for, you and your guardian both have access to the account and can remove the money whenever.
Different type of Cryptocurrency Wallets
If you are only investing in specific coins or are investing in coins that are not supported in the multi coin wallets then this is for you.
*If your coin is not listed here, contact us and we will add your coin :)
Which Wallet Is Best For Me?
Picking a wallet that fits the best for you can be difficult because they all have various pros and cons. My first suggestion would be to sit down and ask yourself “ What am I using the coins for? Investing, trading, accepting payments, purchase goods/services ?”.
If you are investing and planning on holding long term than it might be worth the investment to buy a cold storage device to hold your coins on. If you plan on accepting payments you will want to open a online account and then send the coins to a desktop to hold onto if you don’t plan on exchanging them.
If you plan on using the coins regularly, you might be more interested in the mobile application and online wallets since they are easily accessible.
Securing Your Cryptocurrency!
Hackers, robbers, thieves, and scammers will always exist regardless if you are using fiat currency or cryptocurrency. So, by learning how to protect yourself and keeping your currency safe is a very valuable aspect to know.
The topics we will cover are:
- check Encryption
- check Locking folders
- check Backing up your information
- check Cold Storage
- check Seed Phrases
- check 2-Factor Authentication
Encryption
When creating a password you will want to make sure you are encrypting it. If your password is made up of letters, numbers, symbols, and capitalization mixes it will make it harder for a hacker to figure out your password. Hackers will use programs to try and figure out your password, but if it is encrypted the level of difficulty will increase.
Locking Folders
If you have any folders on your computer that may have passwords or wallet information on them, make sure to lock the folders and add a totally different password to them. If a hacker gains control of your computer, this will hold them off if they have to crack yet another password.
Backing Up Information
Paper is the best way to write down passwords because it will protect you from cyber attacks, I would suggest buying a small lockbox and a notepad to write down your valuable information. This way you can safely store it under your bed and it is not posted anywhere on your computer or on a cloud. This is very important especially if you have a lot of coins, you don’t want them to go missing. Since you are able to control your coins and be in charge, you will need to make sure you are securing your coins and protecting them. You should also be saving private key’s, seed phrases, and email addresses.
Cold Storages
Cold storages are devices that store your private keys in a neutral environment that is not held on the internet or a cloud. It is offline making it more secure and allowing users to safely hold a massive amount of coins securely
Seed Phrases
These are a compilation of random words that can range between 12-24 words and are helpful if you lose your wallet or passwords. They are yet another layer of security that will be essential so don't fall into the trap of the Buffalo Bills and create a solid defence.
2-Factor Authentication
When you are using wallets that support google auth you need to make sure you get it. This will help protect hackers from stealing your coins if they don't have control of your phone. It is very important you back up the google authentication as well because losing it can be a long hassling problem. Do not add texting support, because hackers will be able to social engineer phone companies into swapping your information and disabling it. If you are afraid of this, I would call your phone carrier and disable the option to call customer support, so the only way you can talk with them is by going to a physical location. ( That is of course you live close by to a store ) Another good option would be to use a old phone that you don’t use anymore, download google authentication and take out the Sim card. This will be used only for your crypto currency endeavors and will make everything move smoothly.