Security is one of the most important promises made by blockchain-based technology. However, hundreds of traders and investors have lost their crypto savings.
The reasons for a security breach can vary. Hackers and scammers develop in-depth schemes just to leave you without your hard-earned crypto savings.
In the crypto trade, you are your own bank but the main problem with crypto is that, unlike traditional banking, there is no way to get your digital currency back since there is no insurance. So, saying that wallet security is important is a complete understatement.
Types Of Wallets
It’s hard to know how to secure your crypto wallet without knowing what types of wallets there are. So, before we dive deep into security measures everyone should take when dealing with crypto wallets, let’s take a look at the different types of wallets available.
Non-custodial vs. custodial
If you want to make the right decision, it’s important to know which wallet is better. Non-custodial wallets mean that you are the only keeper of your cryptocurrency assets. If you forget your password, there is no prompt to reset it. While it can be nerve-racking to not have a password reset, you are more secure due to the fact that your private key is not at risk of being leaked by a large corporation.
Custodial wallets on the other hand are less secure but allow you to log in and manage all your crypto accounts. This type of wallet can be accessed online, which is a big plus for people constantly on the go. Although reputable custodial wallets are known for their security, they are still susceptible to a breach, particularly since crypto accounts are the main target of cybercriminals.
Hardware and software
Hardware wallets, also known as cold wallets are compact and can be carried in your pocket. Most models are Bluetooth-enabled and others function as flash drives.
These devices come with a PIN which makes them extremely secure.
However, only you are responsible for the safety and security of your hardware wallet and your crypto accounts will be inaccessible if you lose the pin and there is no way you can gain access again.
Software wallets, on the other hand, can be downloaded from either mobile or desktop apps that are connected to the Internet.
You can make transactions while on the move, and you can also access your crypto accounts via your smartphone. Software wallets are more convenient than traditional hardware wallets in this sense.
They offer the same security net as custodial wallets. If you lose your phone or forget your password, you can get login assistance from the software provider.
In comparison, hardware wallets are much more secure but have some drawbacks in terms of convenience.
How to Secure Cryptocurrency
Now that we went over the different types of wallets, let’s go over different methods that will help you reach maximum crypto wallet security.
Work With a Reputable Exchange
Take into account that not all exchanges are the same. You should do your research and find out which exchanges were compromised in the past. If an exchange is hacked, it could indicate poor security practices or vulnerabilities that could put your investment at risk.
Keep Your Software Up To Date
No matter what device you use, make sure it has the most recent software. You can also set up automatic updates to ensure that all applications on your device are up to date. Bear in mind that endpoint security, such as anti-malware or anti-viruses, is equally important.
Keep An Eye Out For New Threats
The methods you can use to protect yourself from attacks are always changing. It is important to keep an eye on the news for any new threats or attacks so you can quickly respond if your cryptocurrency wallet becomes vulnerable.
Use a Cold Wallet
To absolutely ensure your crypto’s safety, store all your funds in a cold or hardware wallet. You may only need some of your crypto wallets for transactions online, but you should keep the majority of your funds offline. As mentioned previously, a cold crypto wallet is similar to a USB device and contains a private key that can be used for access to your funds. However, remember that losing your key will mean that your crypto funds are inaccessible.
The blockchain market value is expected to grow 68% in the following years and with that, we can expect more profit but also more security breaches. If you decide to hop onto the crypto train, make sure that your wallet is completely secure as a potential hack or breach can mean losing your savings.