How to secure crypto wallets
Today, malicious actors employ sophisticated methods, tools, and techniques to compromise exchange and cryptocurrency wallets. This is the reason why securing your private keys, PIN code, and passwords is critical to safeguarding your digital assets, cryptocurrencies, and funds.
As a digital asset holder/ owner, it is your own responsibility to understand, try out, and adopt sound security and safety practices in order to safeguard your hard-earn money and investments.
The best cryptocurrency wallets available in the market are usually shipped with a set of protection mechanisms to safeguard your funds using seed phrases and other methods in the case of a serious cyber-attack. Still, it’s a wise choice to develop certain practices while using a cryptocurrency wallet to ensure extra security and safety for your digital assets.
It is generally advised to diversify investment across multiple cryptocurrency wallets.
In the crypto universe, the rule of thumb is never to put all your eggs in one basket.
Rather than storing all your digital assets from NFTs to crypto-tokens under one single cryptocurrency wallet, investors and holders must divide holdings across multiple cryptocurrency wallets to reduce risk.
The ideal and the best cryptocurrency wallet infrastructure is the one in which investors employ one “hot” wallet to conduct day-to-day transactions, on the other hand, they dedicate a “cold” wallet to hold investments in the long term.
Generate a strong password.
Did you know that the most commonly used password is 123456, which might sound stupid and ridiculous, but it’s true.
Most users of the best cryptocurrency wallet employ the same password across multiple accounts and devices. So, it is important to generate a strong, random password and change it on a periodic basis.
Investing hard-earned money into cryptocurrency or digital assets; storing the assets in the best cryptocurrency wallet using a weak password is equivalent to losing the asset during a malicious cyber-attack.
Randomly generated password makes it harder for hackers to compromise the best cryptocurrency wallet accounts.
It is advisable to adhere to the following mentioned tips while creating a strong password.
- Pick a random combination of alphabets, numbers, and special characters
- Employ sets of both lowercase and uppercase alphabets
- The length of the password for your cryptocurrency wallet is – minimum 8 letters
- Ensure randomness in the password for your cryptocurrency wallet
Set up 2-factor (2FA) authentication.
2FA is designed to provide the cryptocurrency wallet holder with an extra layer of security.
The benefit of 2FA is that when any user tries to log into their cryptocurrency wallet, a message will be initiated from the provider with a verification code on the official device.
This two-step authentication and verification make the best cryptocurrency wallet account impenetrable.
To get access to the verification code and compromise the cryptocurrency wallet, malicious actors need to convince the user to hand it over to them.
As a cryptocurrency wallet holder, always remember that no authority from the exchanges needs access to your credentials and verification information.
The 2FA codes and OTP (One-time password) codes are secret verification codes and must not be shared with anyone else.
Frequently update software stack.
Software updates are critical for securing your funds. The best cryptocurrency wallet usually provides frequent updates with critical security fixes. These updates not only mitigate risks posed by severe security flaws in the application but also help your digital assets inside your wallet safe in the long run.
Beware of phishing attacks.
The first thing to understand – is what a phishing attack exactly is.
Usually, in a phishing attack, a hacker tricks the cryptocurrency wallet user into providing their credential to a legitimate-looking website.
Just after submitting credentials, you (the user) will get an email from the cryptocurrency wallet service provider or the respective crypto-exchange service provider regarding the unauthorized access of your account – asking you (the user) to immediately reset your username and password.
Because such a threat exists, it is advisable for all cryptocurrency wallet holders to always ensure that the link is HTTPS and belongs to the correct website you intended to connect to.
Even after ensuring all levels of security still, it is highly advisable not to store your cryptocurrency wallet’s private keys online.
Pick a cold wallet over a hot wallet.
In short, hot wallets are those kinds of wallets that are always connected to the internet; for instance, consider the MetaMask wallet. On the hand, cold wallets are those kinds of wallets that are not connected to the internet all the time – they act more like offline storage, for instance, consider USB devices such as trezor and ledger.
Because a cold cryptocurrency wallet requires a tangible amount of technical know-how to set up and operate properly – most of the best cryptocurrency wallet owners tend to avoid it. But conversely, it is considered to be the safest medium of storage, especially for gigantic funds, digital assets, and other holdings.
Hot cryptocurrency wallet provides convenience at a significant cost. Though it allows cryptocurrency wallet holders to log into their accounts from anywhere in the world, but opens the door to potential threats of data theft and breaches.
The biggest drawback of a cold cryptocurrency wallet is that if the holder or owner loses his/ her private keys and passwords, then there is no chance of recovery – there is no “forgot your password” option available in cold wallets.
Note: If you hold your private keys and digital asset in a hardware wallet, then it is important to remember – never ever share your 24-word recovery phrases with your peers, friends, and strangers. Plus, never ever store your recovery phrase on a personal computers or smartphones.