Tips for secure crypto trading and payments
If you don’t trust the traditional financial institutions with your money, cryptocurrencies like Bitcoin and Ethereum provide a tempting alternative. There are many advantages to using crypto instead of regular currencies; one among them is that they are decentralized and self-governed.
Unfortunately, this is a double-edged sword. Though safe from inflation, financial middlemen, and other third-party malversations, trading and payments still expose crypto to hackers.
There are a few ways to keep your cryptocurrencies protected from organized theft. The main ones are about understanding the pros and cons of different types of crypto wallets. Other ways to protect your crypto coins from being stolen are about returning to the basics of cybersecurity.
Here’s how to store and use your cryptocurrencies without attracting cybercriminals.
Embrace and own the responsibility
First and foremost, choosing a cryptocurrency over traditional money means playing by different rules. Crypto’s greatest strength – the absence of a regulatory body – is at the same time its gaping weak spot. That might change in the future, but crypto remains beyond legal control for now.
If your crypto funds get stolen, the police are unlikely to help recover the stolen loot.
As revolutionary as they are, decentralization and self-regulation imply that the only one in charge of your crypto funds is you, for better and worse. Before you decide to buy crypto, you need to understand this responsibility and embrace the risk that comes with it.
Choose your crypto wallet carefully
The next step is researching your options. Cryptocurrency is entirely digital. Since there’s no physical money involved, there can’t be a physical location for holding funds. It makes crypto very elusive and presents quite a security challenge. The only solution we have is this:
Crypto funds are locked with a secret key – a random string of letters and numbers.
It’s up to you, as owner, to figure out how to keep your key away from anyone’s eyes.
These are some of the options.
Keep your keys in a physical wallet
A physical wallet is a piece of hardware, most commonly a USB stick with unique configurations for keeping a crypto key safely locked. Unlike a hot wallet, a physical wallet is often referred to as a cold wallet, which means that a physical wallet is entirely offline.
Use cold storage as a hiding spot
Physical wallets are mostly used in combination with cold storage, an offline hiding spot, for example, a vault. Some crypto holders who rely on cold storage to protect their secret keys decide to skip the wallet altogether. They print out the key on a piece of paper and lock it.
Opting for a hot wallet? Think twice
The alternative to physical wallets and cold storage are so-called hot wallets connected to the internet. These are usually mobile phone apps that work similarly to a password manager. It’s that determined hackers can easily steal hot wallet credentials.
The problem with custodial wallets
Custodial wallets are hosted online solutions. They include a third-party vendor responsible for keeping your secret key somewhere safe. By entrusting a custodian with your keys, you’re losing control over what happens if their servers get breached or they simply go bankrupt.
Develop a strong password routine
Even when you keep your crypto key in a safe offline location, you still need to take it online for trading. You need unbreachable passwords for all your devices and accounts – it’s crucial when you use a hot wallet and access it from your mobile phone.
A strong password doesn’t mean anything. It’s a random string of no less than 12 characters, including letters (upper and lower case), numbers, and special symbols. You should never reuse your passwords for multiple accounts. To be 100% safe, use multifactor authentication.
Install a VPN
Ensuring that all financial transactions happen on secure websites is one thing. One factor many entities miss is the network used. For instance, free Wi-Fi at public locations is probably the worst for any type of confidential activity. Luckily, you can download VPN apps to turn any network secure.
What is a VPN? Well, it can have many benefits and use cases. In this case, you must understand its importance whenever you decide to connect to an unknown network. A Virtual Private Network encrypts information about your actions, meaning no one can snoop on them. Of course, a VPN can be used for other purposes, like breaking geo-blocks on streaming websites.
Practice good cybersecurity habits
The first rule of cybersecurity is to keep your eyes open and remain skeptical.
Never follow a suspicious-looking link, even when it comes from a known source. The same applies to suspicious attachments and free software. Be very careful about what you download, and never leave your info unless there’s encryption. Protect your PC with antivirus and malware software.
All things considered, a combination of a physical wallet and cold storage guarantees the best protection against crypto theft. Hackers can’t get anywhere offline, and there’s little to no risk from physical theft. The only downside is – if your physical wallet gets lost or destroyed, that’s it.
Unlike a forgotten password, you cannot retrieve a crypto key.
It’s not the most convenient solution, but this is all we have. In a world of cryptocurrencies, holding and trading will always pose a certain risk. It’s up to us owners to take responsibility for our funds and keep them as safe as possible – i.e., keep your key offline and locked.
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