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With their ease of use and transaction speeds, cryptocurrencies like Bitcoin truly have the potential to revolutionize the finance industry.
As a result, many people buy these currencies for investment purposes and they hope to make a healthy return as the price increases. Others buy them to use for online shopping and the paying for services, because they offer many benefits over traditional payment methods.
The concern with cryptocurrencies, though, is how to properly protect them? Typically, you'll keep your cryptocurrencies in a wallet.
Unlike traditional wallets, though, these don't store a collection of bills and cards. These wallets store a collection of private keys. It's these keys you use to access your cryptocurrency and make transactions with it.
Unfortunately, this means that if someone gets a hold of these private keys, they'll have access to all your cryptocurrency wealth. Thus, it's important to keep your cryptocurrency wallet safe and protect it to prevent any loss. Here, we'll take a look at how to protect your cryptocurrency wallet.
Use a Hardware Wallet
The best way in which you can protect your cryptocurrency, is by using a hardware wallet. These devices offer the best balance between ease of use and very high security.
This is simply because they are designed to be a wallet and nothing else. You're not able to install any software on them, and this makes them particularly secure against computer vulnerabilities and hackers.
They're especially helpful if you want to store your savings or larger amounts in your wallet.
Be Wary of Online Services
If you want to protect your cryptocurrency, it's best to be wary of any online services. In this regard, there are many exchange and online wallets available that you can use.
These are very convenient, but in the past, they've suffered security breaches. As such, they don't provide the necessary security like, for example, a secured hardware wallet which gives you the assurance that your cryptocurrency is safe.
If you need to use an online wallet, it's best to only store small amounts for everyday use in it and keep your remaining cryptocurrency in a hardware wallet.
Backup Your Wallet
It's also vital that you backup your wallet. This can protect your wallet against computer failures, viruses, theft, and human mistakes.
Once a failure happens or your device is stolen, you'll be able to recover your wallet with your backup. Some of the best ways in which to backup your wallet include USB drives, CDs, or even paper where you write down the private keys and store them safely.
You can even use more than one of these to create multiple backups of your wallet. Also keep in mind that you should make regular backups to make sure that you have the most updated information relating to your cryptocurrency.
Encrypt Your Wallet
When you use a wallet on your computer or mobile phone, you should always consider encrypting.
This way, you set a password that you would need when trying to access your wallet or withdraw any funds. The problem is that if you forget the password, your cryptocurrency will be permanently lost.
Although this helps to protect against the situation where your phone or computer is stolen, it doesn't protect against keylogging hardware or software.
The Bottom Line
The popularity and surge in prices of blockchain-based digital currencies have made them increasingly popular with investors. Unfortunately, it also made them an easy target for hackers who want to steal your money.
For this reason, it's vital that you protect your wallet against these threats.Now you have a better idea about some of the ways in which you can protect your cryptocurrency wallet.
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Author Bio
Mauricio is a financial journalist, senior content strategist, and inter-markets analyst with over ten years of experience in stocks, forex, commodities, and cryptocurrencies. He has worked for different companies and roles in the financial industry, including news media, brokerages, FinTech startups, and institutional firms. He is also a trader which allows him to make a holistic approach to financial markets.
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Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.