Like anything else of great import or worth, cryptocurrencies need to be secured. However, the same decentralized and virtual nature that so distinguishes them from every other form of currencies makes it such that extra measures need to be taken to ensure there is neither a total nor partial loss of funds – especially in the case of a breach.
In this piece, we examine a series of measures which can be taken to prevent either deanonymization on the blockchain network or an attack resulting in the loss of your funds.
How to Effectively Store Your Crypto Assets
As a testament to being digital currencies, cryptocurrencies are to be stored digitally in wallets. Apart from keeping in your coins, they allow you send or receive coins and interact with several blockchains through private or public keys.
There are several wallets out there which make the choice of the safest storage method a tedious. Let’s explore the various wallets out there and how best they can keep your funds in.
Using a Hot Storage
Hot storage systems allow you store your coins online and trade them just as easily as possible. In reality, this is the easiest route to take when seeking a way to store your crypto assets. They give users the advantage of easily trading and validating transactions with complete ease. Hot wallets include mobile wallets or software wallets, Exchange wallets and Cloud wallets:
- Software wallets
They mainly involve wallets downloaded on a mobile phone or a PC. The not only give users the ability to secure their assets, they also help users transfer multiple coins easily with secure connection. However, the cons of using this method remains that the possibility of hackers and malwares getting their hands on one’s coins is not completely eliminated.
Try out the Cold Storage
This method of storage simply means that you get to double up the protection of your funds by keeping your private and public keys offline. Modern technology has made it such that keeping off prying hands and eyes away from our assets is getting increasingly difficult.
As such, though hot wallets do their best to give out optimal protection, there are risks of being hacked into or malware disruptions. Hence, cold storage methods are one of the best ways to keep your investments where they belong especially in the long term.
- Paper Wallets
Though relatively the analogue way, paper wallets give you total control over who views your keys and allows your coins stay where you want them. As implied by the name, paper wallets are simply a physical representation or paper print of your private keys.
In some cases, it involves a print of a QR Code that allows you to move your funds upon scanning and at other times, you can simply get to input your keys into a software client and you gain access your funds.
In reality, this is one of the best methods of securing and storing your crypto assets. At least, it keeps those unwanted hands away. However, there are risks of losing this wallet, or it getting burnt or even stolen. Otherwise, they are one of the best out there.
- Hardware Wallets
Like paper wallets, it involves the storage of your private keys offline (i.e. external source). This mainly involves the use of external drives like USB or hard drives to store your keys.
Majority of these wallets are designed to be compatible with web interfaces and digital currencies, thereby making online transactions as easy as possible. Luckily, hardware wallets like Trezor, Ledger and KeepKey are capable of giving out the best service, so you don’t have to look too far.
Hardware wallets have the added advantage of working like a mini crypto exchange by supporting several cryptocurrencies albeit not all. So short of it getting stolen or spoilt, hardware wallets are relatively the best out there.
How to Effectively Secure your Digital Assets
Cryptocurrencies might feel secure in themselves but their wallets are not exactly the same way. Hence, the mantle of protection majorly falls to the users and this can be done in a number of ways:
- Let Your Private Keys Remain Private
One sure way to keep our coins safe from unwanted hands is by learning from the anonymous nature of the cryptocurrencies we seek to keep safe. It is therefore paramount to make sure that our private keys remain private by making sure that there is no real link between your identifiable information and your keys.
You could try using another email address that cannot be traced to you for the wallet and make sure that you do not disclose private detail.
- Use an Exchange only for the Short Term
Though decentralisation is a major endearing feature of cryptocurrencies, most of its exchanges are centralized. This, in a way, makes them susceptible to various cyber attacks. Since anonymity is also a key factor, it means there is practically no customer care to complain to when the coins get tampered with.
This is why it is paramount to keep only a small quantity (i.e. one you can afford to part with on occasions) on exchanges except when trading. It saves you a lot of stress and loss.
- Double up with both a cold and hot storage
Though cold storages are the most secure method of storing up your crypto assets, getting to trade with this method can be quite stressful. This is why you can never go wrong with extra measures.
Try adding a hot storage facility to the cold storage facility. It not only helps secure your cons, they have the added advantage of making trading easier and more efficient.
- Use Two-Factor Authentication i.e. 2FA
How to Effectively Trade Digital Assets
The best way to trade your cryptocurrencies is via crypto exchanges. Crypto exchanges allow to store and trade at agreeable rates. However, to profitably trade at this level, the following fundamentals must be looked into.
– The Availability and Validity
It is important to note the availability of your exchange of choice. This helps with how best you can trade in your locality.
– The Exchange Rate
In most cases, the exchange rate is mostly a predetermining factor of how well crypto assets can be traded. It is important to not which rate is agreeable and more profitable before choosing.
– The Safety and Reputation of the Exchange
It is important to properly study the safety and reputation of the exchange to avoid losses and trade more profitably and easy. A good place to start your research is via Twitter or Reddit. This gives you a wide range of reviews that will make your choice easier. Luckily, the crypto world boasts of legitimate exchanges such as Coinbase, Gemini, Binance and many more.
With all these underway, you could register on an exchange of your choice and start trading.