Just days ago, Bitcoin broke its all-time high, reaching roughly $19,860 on Nov. 30, 2020. Although the world-popular digital asset has simmered back down, the cryptocurrency industry is sitting pretty. Whether you’re catching on now or you’ve had a long-running interest in digital currencies, it’s never too late for a refresher on cryptocurrency asset security.
Given the relatively new, unregulated nature of cryptocurrency, many cybercriminals and predatory characters prowl around for unsecured digital assets without fear of retribution. Fortunately, solid self-protection measures will keep others’ greasy paws off your hard-earned holdings. Here, we’ll cover several methods for securing cryptocurrency assets.
Paper wallets, resembling plus-sized business cards, feature a private key and public address. Used widely until the mid-2010s, Bitcoin owners used website applications or programs to print these wallets. They’re now considered obsolete, employing bad practices like encouraging address reuse and promoting raw private key sharing. Paper wallets can easily suffer water damage or otherwise be destroyed, rendering them useless.
One safe way of securing your cryptocurrency assets on paper is writing down your seed phrase. A seed phrase is a string of words used to recover digital wallets in case of emergency. Never write this phrase anywhere online, even in seemingly secure local files.
Also known as desktop wallets, cold wallets store Bitcoin without touching the internet. Although less convenient than online wallets when making trades on Bitcoin exchanges such as OKEx, cold wallets are much less susceptible to hackers or malware.
Avoid storing your cold wallet on your primary computer. Despite safe browsing practices, you could still run into malware, potentially allowing cybercriminals to steal your cold wallet’s holdings. If possible, keep your cold wallet on a used smartphone or laptop. For maximum security, avoid connecting this device to the internet, installing your wallet and an operating system from a USB drive.
Hardware wallets, a type of cold wallet, store cryptocurrency assets on small, dedicated devices used exclusively for storing your wallet. These wallets are small, typically taking the form of a thumb drive. Unlike thumb drives, manufacturers build hardware wallets solely for storing wallet information. Despite their reduced functionality, these wallets offer unmatched security.
Additional Security Precautions
Although the aforementioned wallets provide protection from cybercriminals, you still need solid operating security to protect your holdings. If possible, implement these two security measures into your cryptocurrency hygiene.
Adopt Multisignature Protection
Normally, only one private key is needed to authorize Bitcoin transactions. Multisig requires multiple private keys to send Bitcoin and other cryptocurrencies.
Organizations, businesses, and groups use multisig to prevent unauthorized transactions. Even as an individual, you should consider adopting multisig. Assume you send cryptocurrency from your desktop’s cold wallet. Before the transaction is finalized, you’d need to enter a private key from another computer or phone. Depending on your setup, you could also manually input a private key on your desktop.
Use Two-Factor Authentication
Also known as 2FA, two-factor authentication requires cryptocurrency owners to prove their identity in two ways. On top of your cold wallet’s private key, for example, you might need to enter a code sent to your phone via text message.