In 2009 Bitcoin revolutionized how we handle currency, making new possibilities into reality when it comes to money as a whole. Today, most money is already digitized but centralized and protected by banks or government organizations. Cryptocurrencies are not like this; they are decentralized currencies with public ledgers called the blockchain. Unfortunately, there is a lot of information going around about crypto and crypto security and not a lot of entry-level content to help people learn. That is what we are going to tackle a bit today.
There are some built-in security features of different cryptocurrencies. However, the responsibility to keep everything safe is 100% yours. Digital security can be daunting on a regular scale, and bringing crypto into the mix can make things even more difficult. So let’s break down some steps you can take to keep your investments safe.
A crypto wallet is, to some degree, a misnomer. Unlike your daily wallet, a crypto wallet holds encrypted information, not currency. A wallet is the first line of crypto security if you use one correctly. The wallet stores your public and private keys that allow access to your cryptocurrency. This information is part of what is needed by the blockchain itself.
The different types of wallets can get a bit confusing, so let me de-mystify them for you. There are two main types of wallets: hot wallets and ledgers (also called hardware wallets).
Hot wallets like Meta Mask or Trust Wallet are usually extensions you download to your PC and live on your browser. You can use these to hold different types of crypto and crypto access information for logins, approvals, etc. While these are popular for beginners, they can present a few crypto security issues.
The world of crypto has many skilled computer users, and hacking is always a risk when it comes to your personal information, but money is always more desired. Hot wallets are more vulnerable to hacking in every way because they are a part of your browser. If you’re unfamiliar with the kinds of hackers that might be interested in your crypto information, we’ve talked about the kinds of hackers and their methods before on the Xidax blog. Having software holding your crypto will leave it inherently more vulnerable to theft or tampering. For these reasons, the ledger was created.
Ledger is the name of hardware wallets for cryptocurrencies. These are held entirely separate from your PC, making them far more secure from online attacks. This does not mean they are hacker-proof, they are just harder to hack because they are not an innate part of the computer system used to trade crypto in the first place. Ledgers have additional safety measures on them that hot wallets do not. For example, a ledger will have buttons that are pushed to do things like authorize transfers, approvals, or general access.
Ledgers can be kept on a key ring or near the computer in a safe place. This is recommended because they are not connected if they are not plugged in, which keeps the information stored on it safer than a hot wallet. You still have to be cautious with these and purchase them directly from the company. Buying a cheaper hardware wallet secondhand can lead to utter disaster since there is no way to tell if they have been tampered with. Crypto itself is an investment, it would be wise to think of the storage for it as an investment as well.
There are some things these wallets have in common.
This key allows you to review cryptocurrency transactions, and it is paired with a private key. You can share it with people for trades of any kind.
This key is used to prove ownership and spend your funds. You do not share this with anyone.
A seed key is a giant series of words used to access your currency. This is something you would typically write down and keep separately from your PC. Many will write these phrases down on paper and store them in a safe location. You do not want your seed key stored on a computer, as computers can be hacked. Someone could still steal your seed key, but it would require the person to be in your home. This is a password code access treasure trove to get into your crypto.
On both wallets, you can manage your different currencies and the private keys for each of them.
There is one other type of wallet that is available, called custodial wallets. These are places like Coinbase, and they are a stock broker for your crypto. They handle the security, wallet, and fees that can occur for trades. This is the most commonplace for beginners to start because of the security and lower cost. If you use a custodial wallet, it is recommended to use an authenticator. You should not use just 2-step authentication via text but a physical authenticator. Text authentication is not recommended because of hacking. SIM hacking is becoming increasingly common. An authenticator would help you prevent this risk by keeping more than just your cryptocurrency safer.
There is a lot to remember when it comes to your online security. It is essential to practice safe habits in order to protect yourself. Remember the basics. Keep your personal information close. This is the most valuable information you have, and hackers are willing to go to great lengths to get it. One piece of fundamental security you can implement for crypto is that you have the ability to make a designated computer for it, one that does nothing else.
If you can, you can use a stand-alone computer for crypto transactions. Make sure it is set up with no other software installed. This will minimize the risks you are taking online when interacting with the blockchain while also limiting its connections with other devices. This can help reduce the possibility of malware. No matter what machine you are using, remember to use safe browsing practices when you are online.
These practices might be all you need to protect yourself on the internet, including your crypto. Taking extra precautions with your valuables is never a bad thing. You can do many things to keep your cryptocurrencies safe, both basic and advanced.
If you have been successful in your crypto journey, did you know Xidax accepts crypto payments for custom gaming PCs? Check out Xidax.com today for more information. Until then, game on!
DISCLAIMER: This is not financial advice, crypto is a risk, and you need to ensure to educate yourself on this topic. You could gain or lose crypto when you trade it.
