When you buy cryptocurrency, it doesn’t come with the same protection as you get with stocks or the money in the bank. Moreover, with the rise of crypto scams in recent years, a crypto investor must mandatorily learn how to store cryptocurrency safely. As a crypto owner, it is your responsibility to keep your investments safe.
Since cryptocurrencies work through a decentralized platform, there are unique challenges when it comes to their safety. Moreover, deeper concerns exist about a lack of international agreements and legal measures.
Hence, it is crucial for you to take necessary security measures as you hold your assets. To learn more about what measures you can take, read until the end of this article.
Understanding the Risks of Crypto Ownership
As cryptocurrencies become popular in the world of investments, there are increasing concerns for security. Additionally, due to the constantly evolving nature of crypto, legal authorities are failing to keep up. Hence, they are at a loss when it comes to managing the industry.
The following are some of the major risks of cryptocurrency ownership:
1. Regulatory and Security Risks
As crypto is constantly evolving, the legal infrastructure is failing to keep up. Moreover, it lacks the capacity to manage crypto assets. On the other hand, cryptocurrencies are subjected to scams, hacking attacks, phishing, and more.
2. Compliance Requirements
Due to the changing nature of crypto and blockchain technology, the regulatory environment is constantly trying to keep up. Hence, new policies and regulations keep coming up from time to time.
Therefore, owners need to keep up with regulatory compliance. Otherwise, it can affect their legality.
3. Operational Risks
Many cryptocurrency owners are businesses. In fact, many of them rely on their crypto as collateral. However, since crypto prices fluctuate a lot, there can be credit risks. Such factors make crypto owners vulnerable.
4. Price Volatility
As already discussed, crypto prices are extremely volatile in nature. This is because it changes frequently and lacks stability. Hence, owners always possess a risk of losing on investments. Therefore, it is crucial to take security measures for such cases.
5. Loss or Destruction
If there are accidental losses, natural disasters, or any other situations like an exchange going bankrupt, owners can lose their crypto assets. Moreover, even if you keep a third party responsible for your private keys, there is still a chance that they can misplace or lose them.
Hence, a crypto owner needs to learn how to store cryptocurrency safely. To learn more about the various risks of crypto ownership and safety issues, check out Coinfomania.
How to Store Cryptocurrency Safely? – Security Measures
The following are the best practices and security measures that will show you how to store cryptocurrency safely:
1. Choose a Crypto Wallet
Selecting the right wallet to store your crypto is the first step you must take. There are two types of wallets: Hot Wallets and Cold Wallets.
If you perform crypto transactions daily, hot wallets can be convenient. However, they are quite vulnerable to cybercrime. On the other hand, cold wallets store your assets offline. Hence, the level of security is high.
For instance, a Hardware Wallet is a type of cold wallet that you must choose if your security is a top priority. Some examples of hardware wallets are Trezor, Ledger Nano X, and Ledger Nano S. These devices are offline platforms to hold your private keys. Hence, it ensures protection even after your computer is hacked.
Moreover, to ensure your hardware wallet is secure, you can store it in a bank vault or a safe.
Paper Wallets are yet another offline solution to store your crypto assets. Here, it generates a document that contains both your public and private keys. However, you need to handle these wallets carefully. Otherwise, you can end up losing or damaging them. Moreover, they are also not vulnerable to cybercrime.
2. Use a Strong Password
Make sure to use strong and unique passwords that are difficult to hack in all your crypto-related accounts. To generate and store your password in a secure manner, you can use a password manager. It will thus lower the chances of unauthorized access.
3. Implement Multi-Factor Authentication
Whenever you use your exchange account, make sure to enable multi-factor authentication. Hence, there will be an additional level of security. For instance, apart from the main password, there must be a text message in the form of an OTP or an app-generated code as you access your crypto accounts.
4. Verify Online Sources
Phishing is a major issue when it comes to investments and online transactions. For instance, many cybercriminals use fake social messages, emails, phone calls, and websites to make you
reveal your sensitive information. Hence, verify every online source before you connect with it.
5. Update Your Software
Whichever software you use on your phone, ensure you update them regularly. These updates come with security patches. This further helps you to manage susceptibilities and keep away scammers. Also, it is crucial to back up your wallet and keep different copies in multiple secure locations.
6. Storage Diversification
Only amateurs keep all their crypto investments in one place. When you invest in crypto assets, make sure to keep some in hardware wallets, some in paper wallets, and some in exchanges. Generally, crypto in exchanges is heavily liquid. Keep most of your cryptocurrencies in cold storage.
7. Use a Reliable Network
Overall, a secure internet network offers you protection against malware and phishing. Moreover, use an up-to-date and reliable antivirus program on your network and devices.
Wrapping Up
The crypto world is evolving with time. Hence, asset owners must learn how to store cryptocurrency safely. However, to secure your crypto assets, you need to go through multi-faceted processes. Meanwhile, you need to pay attention to detail and vigilance. Just follow the steps above to ensure best practices.
Do you have more suggestions on how to safeguard crypto assets? Please share your ideas and opinions in the comments section below.
