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cybersecuritycryptoOctober 18, 2022
How to Safeguard Your Crypto Wallet
October 18, 2022

How to Safeguard Your Crypto Wallet

A major concern when owning cryptocurrency is how to store it. Cryptocurrency is not protected in the same way as funds in a bank account or investments held by a broker. Being the owner, storing cryptocurrency is your duty.

 

 

There are a few options for storing cryptocurrencies, such as hardware devices, apps, and in fact, a simple sheet of paper. As you get to understand more about all the storage methods, you can pick the wallet or wallets that will ensure the safety of your cryptocurrency.


 

Even if you already are in the cryptocurrency business or are considering diving into it, here's what to know about crypto wallets and some tips on protecting your wallet from cybercriminals.
 

What Is a Crypto Wallet?


 

A cryptocurrency wallet is a software tool or a physical device used to hold your cryptocurrency accounts' public and private keys. The keys are lines of digits and letters to encrypt and decrypt crypto transactions and protect your crypto accounts.

 

 

Private keys work just like a debit card PIN or a password for your online banking. They must be carefully protected since your hard-earned bank balance can disappear if it falls into someone else's hands. A crypto wallet can also be used to send funds among different types of cryptocurrency and perform transfers.

 

Different types of crypto wallets

 

Below are some basic crypto wallet types to help you choose exactly which one is good for you.

 

  • Non-custodial vs. custodial


The distinction between custodial and non-custodial blockchain wallets is quite simple regarding security. Custodial crypto wallets depend on third parties (backends) to keep people's private keys, thereby demanding that users have more trust in them.

 

 

Non-custodial crypto wallets are entirely user-controlled, giving the user ownership over the safety of the tokens. Non-custodial crypto wallets are often publicly accessible, which is a sign of trust and safety for users. As it is open-source, however, attackers can also become familiar with implementation details and easily uncover flows.

 

  • Hardware (cold) vs. software (hot)

Cold cryptocurrency wallets (offline, hardware, paper wallets) are among the most secure means of storing cryptocurrency because they are not connected to the Internet. 


 

People do prefer hot (online) wallets - mobile apps or web extensions - as a matter of convenience, though. They enable you to process transactions on the run since your cryptocurrency accounts can easily be reached via your phone. As such, they are more user-friendly than cold wallets.



Software wallets would be highly safe once two-factor authentication is enabled in your login settings. Yet as they are connected to the Internet, a cybercriminal could always potentially hack into the wallet. Hence, hardware wallets are regarded as more secure than software wallets.


How to Keep Your Crypto Wallet Safe

 

Here are some tips to check out for ensuring the safety of your assets in your crypto wallet:


 

  • Use a cold wallet

As mentioned above, cold wallets are not connected to the Internet, so they are not vulnerable to cyberattacks.  Cold wallet storage of private keys is the most appropriate option because they are encrypted, ensuring the safety of your keys.

 

  • Use secure Internet

You should be connected only to a reliable Internet connection when making a transaction in crypto or trading and stay away from insecure public Wi-Fi networks.

 

  • Regularly check your accounts

Be sure to regularly check on your crypto wallet to confirm that your accounts are safe and that you can quickly track down any unusual activity.


 

  • Frequently change your password

Speaking of security, the significance of a strong password should not be underestimated. Be sure to have a reliable and complex password that's hard to guess, and regularly change it. Make sure you have unique passwords in case you have more than one wallet. Use two-factor authentication (2FA) or multi-factor authentication (MFA) for extra safety.


 

  • Customize two-factor authentication

As far as login security is concerned, you should always make sure that you turn on two-factor authentication. That's one of the greatest ways to discourage a thief. If your device has biometric authentication, this is even better. This means that only scanning your face or fingerprint will unlock your accounts.


 

  • Don't take the bait

Phishing fraud using misleading ads and emails is booming in the cryptocurrency world. Be cautious when making cryptocurrency transactions and keep yourself away from any strange or unfamiliar links. Cyberattacks are typically carried out through fake domains, pretending to be related businesses and employees, and by inserting fraudulent links into email documents.


 

To summarize how to securely keep cryptocurrency, get started by picking one or more crypto wallets. Put your cryptocurrency into your wallets, note down your restore phrases, and - most importantly - store those phrases in a safe place. Check out the most up-to-date security news, attack methods, and prevention tactics.