The proper storage of Bitcoin and other cryptocurrencies should be a priority for everyone that owns digital tokens. The failure to protect your digital assets can lead to loss. The good news is that there are some simple rules for securing your cryptocurrency that will help to prevent trouble. Don’t become one of the many sad stories out there about people who lost all their Bitcoin. Take these measures instead.
Keep Your Information Private
Any form of cryptocurrency storage is only as good as the private keys to your wallet. Lose those and your recovery seeds and your Bitcoin will vanish into the ether. Share these keys with someone else and you have opened the door to potential loss. Leaving your keys and passwords in areas where someone else can access them is poor security. Keep your information private.
Cryptocurrency is an asset that demands attention to privacy and diligence. Being lax in the way you store your information is a weakness that you may come to regret. Even worse, if someone obtains the private keys for your crypto wallets and cleans you out there is really no recourse. Your tokens are gone. End of story.
Use Strong Passwords
Those who use cryptocurrency on a regular basis or trade it on a crypto exchange are going to have to create a lot of passwords. In anything related to your cryptocurrency investing you need to use strong passwords that are virtually impossible to crack. That means no birthdays, no social security digits, and no 12345 or other sequences that are easy to guess.
There are some good password managers available which will even help you create strong passwords. LastPass is one of the most popular. However you choose to keep track of your passwords, refer back to the first rule we mentioned. A strong password will not help you at all if someone else has access to it.
Use Multiple Cryptocurrency Wallets for Storage
You can decrease the risk of loss if you spread out your tokens among several wallets and also backup your seed phrase. You might want to have a hardware wallet, a paper wallet, and the wallets at your cryptocurrency exchange. The reason for this should be obvious. If you have multiple wallets there is less chance of losing your entire stash of tokens. If one wallet is compromised you will still have digital assets in the others.
One word of advice. Don’t go overboard. Two or three wallets should suffice. Each wallet that you create means more private keys to keep track of. As your crypto holdings grow you can always add more wallets if you need them.
The best course of action is to probably use wallets that offer you a mix of online and offline, or cold, storage. The best examples of online wallets today are probably those provided by crypto exchanges like Coinbase. You can take a reasonable amount of comfort in the security these wallets offer, but hacks do occur. Keeping at least part of your holdings in cold storage that is not stored online is wise.
Designate a Heir
None of us want to think about the possibility of passing away, but reality demands we be prepared. There is no guarantee you will be here tomorrow. You should choose a trusted beneficiary to receive your wallet details in the event of something unfortunate. Make sure that whoever you choose can be counted on to disperse your digital assets in the way you intended.
Your chosen heir or beneficiary does not have to have access to your wallet information while you are still able to manage your affairs. You can specify in a will who will receive the information and where that information can be found.
You should also think about someone that is trusted to keep recovery seeds for your wallets in case you lose them. Yes, we know that contradicts the first rule we mentioned. Having just one person you can turn to if your wallet details are lost can be helpful, but choose wisely. A close family member is probably better than a friend in this case.
Always Use Two-Factor Authentication
Two-factor authentication has pretty much become the standard for all cryptocurrency exchanges. This type of authentication will require the use to enter a code in addition to a password when the account is accessed. The code might be sent to your mobile phone or email when someone tries to log in to the account.
The truth is that you should probably consider two-factor authentication on other applications such as your email. It simply gives you an additional layer of security that might save your bacon of a hack is attempted.
Consider a Separate Email for Crypto
You might want to consider creating a separate email for cryptocurrency matters. You can use this email when you create accounts at crypto exchanges and such. Some people find that separating their crypto interests from other business is smart.
Email addresses are frequent targets of hacks. If someone were to hack your primary email address and you also use that address for cryptocurrency, the results could be a disaster. There are many services that will provide you with an email address for free, and most of them offer strong security protocols to keep your email private.
A Final Word on Cryptocurrency Security
You must remember one thing above all else: the security of your Bitcoin and other crypto assets is your responsibility. No one else is going to weep for you if you lose your crypto. Don’t depend upon the crypto exchange or anyone else to keep your information secure. Everything rests on your shoulders.
It can be tempting for those new to cryptocurrency to adopt lax security measures. The reason for this is that they don’t appreciate crypto as a real asset because it has no physical existence. Resolve within yourself right now that cryptocurrency has value, and it deserves the same protection that you would give to cash or other assets.