With the cryptocurrency market in the middle of a major bull run and Bitcoin (BTC) nearing its all-time highs, the security concerns of cryptocurrency self-storage become more relevant than ever.
On November 12, Bitcoin – the world’s largest cryptocurrency by market capitalization – crossed the $ 16,000 mark for the first time since the 2017 rally, where the BTC price landed at an ATH of $ 20,000. After reaching $ 16,300, Bitcoin was above that price for just 12 days in its entire history.
With Bitcoin now at its highest historical level and the crypto community anticipating more records in the near future, it is important to remember that the security of crypto holdings is highly dependent on the user.
Here are some simple steps to ensure that your cryptocurrencies like Bitcoin are safe in this bull market.
1. Use a paper wallet or a hardware wallet
Since Bitcoin essentially allows you to be “your own bank”, the responsibility for storing crypto rests primarily with the users. A popular phrase in the crypto community is “Not your keys, not your Bitcoin,” which means that whoever holds the set of keys on a wallet controls the coins it contains.
Wallets come in many forms: software, hardware and paper, each with different security aspects.
As the name suggests, software wallets are based on software that enables users to access their crypto by installing applications on their mobile devices or a computer. As a result, software wallets come in many different types such as web, desktop, and mobile wallets.
Although software wallets are often free and easy to use, they are not entirely secure as most of them are somehow connected to the internet, which can leave them vulnerable to hacking or security breaches. Users should keep their apps up to date to reduce the risk of potential security breaches.
A paper crypto wallet is essentially a piece of paper that contains a printed crypto address and its private key in the form of QR codes generated through paper wallet websites. These codes can be scanned to carry out crypto transactions. A paper wallet is very resistant to online hacking attacks and is often viewed as an option for cold storage.
A hardware wallet is another sophisticated method of storing crypto that isolates users’ private keys from the internet by keeping them offline on a USB connected device. Also known as cold storage or cold wallet, a hardware wallet is often associated with an increased level of security, as private keys remain completely offline, which is intended to make them immune to any type of remote hacking. Trezor and Ledger are the most popular hardware wallet providers.
2. Check that your 2FA verification is enabled
Don’t ignore an important additional layer of security by forgetting to enable two-factor authentication or 2FA in the security settings of your wallet account. 2FA sends an additional password request to your phone or email every time you log into your wallet. By enabling 2FA, a user prevents a hacker from gaining instant access to a crypto wallet account as the hacker also needs physical access to the user’s phone or email.
Google Authenticator is one of the most popular 2FA applications that offers users two-step verification on a phone.
3. Never share your private keys
Never give your private key or a seed phrase to anyone. That way, you’d essentially be giving the keys to the lock. Remember, reputable crypto companies will never ask you for your keys even if they are trying to help you solve problems.
4. Make sure the recipient’s wallet is correct
Always check a recipient address before proceeding with a transaction. A simple one-letter mistake could redirect your transaction to another wallet. Unlike some traditional financial services, most crypto transactions are irreversible. Some malware is also capable of changing the correct target of your crypto so that double checking of transaction details is never redundant.
5. Don’t fall for freebies
Never fall for offers like “send us bitcoin and get double your bitcoin back”. This type of attack is widespread on Twitter, with attackers often impersonating celebrities, politicians, or crypto personalities and promising to double the user’s crypto fortune.
Since this type of attack is often associated with newbies to crypto, it could become even more noticeable as crypto adoption increases. In July 2020, online hackers managed to collect at least 12 BTC in a high-profile hack from Twitter accounts such as Elon Musk and 2020 US presidential candidate Joe Biden.
6. Use smaller transactions and different exchanges
Don’t send a ton of crypto in a single transaction when you need to buy or sell crypto on a crypto exchange. If you have a large amount of money to trade in crypto, you’d better split it up into multiple transactions to make sure an exchange is working properly.
While all of these layers of security and double checking may seem like a hassle, they are key to making sure your money stays safe.