It’s more than likely that you’re as enthused about cryptocurrencies as the world currently is. With Bitcoin at an all-time high and positive sentiment around cryptocurrencies in general, many of us are now confident about digital currency than ever before.
While popular platforms such as WazirX are secure enough to hold (or HODL) your funds as long as you need them, it is still wise to know all that you can about how to ensure that you don’t get scammed or fall prey to phishing when it comes to your hard-earned cryptocurrency. After all, according to the US Federal Trade Commission, at least 7,000 people lost more than $80 million in crypto scams between October 2020 and March 2021. That’s over a 1,000% increase from a year ago.
Keeping that in mind, we’ve come up with some of the best practices you need to follow when it comes to managing your cryptocurrency.
Choose the best exchange
The very first step to securing your cryptocurrency is knowing where it will be stored. You wouldn’t put your hard-earned money in a shady bank even though it promises the moon, right? Similarly, take time to research the exchange that you’re most comfortable putting your money and cryptocurrency in. For such a scenario, its best to choose the most popular cryptocurrency exchange that is already trusted by others in the same space. In India, one such exchange to explore is definitely WazirX that is trusted by millions of users and has some of the best-in-class security you should expect from a cryptocurrency exchange.
2) Safeguard your private key
All cryptocurrencies are stored on digital wallets or on exchanges, the key to which is given to the owner in the form of an alphanumeric code. Do not, we repeat, do not let anyone have access to this key in any way. More importantly, do not store this key on any email or note-taking app, as these can be hacked into as well. Do not write it on a piece of paper and leave it where it can be accessed by anyone.
The best thing to do is memorize your private key for your personal use. If that’s too much, store it behind a firewall and password-protected or fingerprint-enabled app of your choice that has a high trust factor.
3) Open different accounts for different cryptocurrencies
A way of spreading risk rather than putting all your eggs in one basket, this strategy entails the usage of opening different accounts when you want to trade in different cryptocurrencies. For example, if you want to buy Bitcoin and Ethereum, it’s a better idea to open two accounts on a secure platform like WazirX so that even if one of them gets attacked or hacked into by any means, your other investment stays safe.
4) Use cold wallets and hot wallets
When you start trading cryptocurrency, you will inevitably use a cryptocurrency wallet, which is basically a software program that stores your public and private keys, interacts with various blockchains, and monitors your balance. There are two main types of wallets – hot and cold.
Hot wallets are connected to the internet and can be accessed anytime while cold wallets store your funds offline. Generally, it’s a safer bet to use cold wallets if you’re looking to build your fortune in cryptocurrency over a longer period. Hot wallets, on the other hand, are used by those who indulge in frequent crypto trading.
Cold wallets are further divided into two popular types, paper wallets and hardware wallets, of which the latter is worth mentioning. Hardware wallets consist of third-party USB-enabled devices that store your keys in a cold, offline and secure environment, giving you more control than hot wallets. A simple search on e-comm platforms for hardware wallets can steer you in the right direction, making it one of the best investments you can make to protect your cryptocurrencies.
5) Assume you will be targeted
One way of making sure you take your cryptocurrency security seriously is to assume that you will be targeted by hackers and to take remedial measures pre-emptively. Whether its email phishing attacks, brute force attacks that can bypass 2-factor authentication and more, hackers can use sophisticated measures to steal your cryptocurrency. The best way of preventing them is to keep your keys safe and by keeping tabs on any news related to hacking to ensure your assets are safe by following any of the above tips.
While most exchanges have ample security measures in place, this does not mean that cryptocurrencies are immune to hackers. Remember that lost or stolen cryptocurrency is virtually impossible to regain. Ensure that you get a good night’s sleep while your cryptocurrency assets are safe and secure by following the steps outlined here.
This is a partnered post.
First Published: IST