How to Safely Store Your Cryptocurrency

Update 16 Nov 2021 • Reading Time 3 Minute

Reading Time: 3 minutes

As in the case of physical assets, we also need to pay attention to how to store your digital assets safely. Of course, these two types of assets have different ways to secure it. We can see that many hacking cases occur in the world of digital banking. As long as your digital assets are still connected to the internet, this makes your assets very vulnerable to the threat of hackers.

Just imagine suddenly the value of your crypto assets increases by millions of dollars. You don’t want to lose your crypto assets, do you?
As a user, you should understand how to protect your private key, which gives you authority over your account. If someone knows your private key then that person can control your assets. Here are some ways to save your crypto assets safely.

Use Hardware Wallet

Hardware wallets are objects specifically designed to store crypto assets. Hardware wallets can store users’ private keys in a secure hardware device with very special features. One of the main advantages over standard software wallets is that they are immune to malicious computer viruses.

In addition, private keys are often stored in a protected area of the microcontroller, and because of this, they cannot be transferred out of the device in plain text. Plus, because the software is open-source, it allows you to validate the entire operation of the device and how well it performs.

With hardware wallets gaining popularity worldwide, there is no doubt that investing in dedicated hardware is for the added protection of crypto assets.

Popular hardware options include the Trezor or Ledger. This small, key-sized device connects to your computing devices via a USB cable while offering secure storage features along with the convenience of a hot wallet as well.

block-heading joli-heading" id="save-private-keys-outside-the-internet-network">Save private keys outside the internet network

Since many users are more familiar with physical security than digital, many choose to convert their crypto assets into physical form. Take Bitcoin for example, Bitcoin’s private and public keys are just a long set of letters and numbers. So as long as you know this set of letters and numbers you can access and control your bitcoins. Many choose to print these letters and numbers on a piece of paper.

Because it is in the form of paper and you can choose to keep it yourself like in a safe or in a secret place. This way of storing crypto assets is known as cold storage.

Backup Your Wallet

Human error and computer failure can occur. In this case, you should have a backup of your wallet. Wallet backup can help you to recover your wallet even after the device has been stolen. You should backup your wallet especially if you are still using an internet-connected wallet.

A backup wallet can be 12-24 words which we call a seed phrase. This seed phrase represents your private keys. Backing up your wallet outside of the internet is like writing this seed phrase on a piece of paper, some people even engrave this seed phrase on metal so that this seed phrase is not easily damaged.

Diversification

“Don’t put your eggs in one basket”. This classic adage applies not only to physical assets, but also to digital assets. Some users store their crypto assets in multiple wallets, and only a small amount in online wallets. Thus, if you lose access to one of your wallet, then you will not lose all the assets you have.

Multisignature

If you store large amounts of crypto assets, you should consider using a wallet address with multisignature. Multisignature wallets are also suitable for companies that store crypto assets.

With multisignature wallets, several parties must store several private keys for one wallet. So that people cannot take your crypto assets without knowing all your private keys. For example a wallet with 2 out of 3 multisig means that the wallet has 3 private keys and to use the wallet you need at least 2 private keys.

Legacy

Some people are thinking long term about giving access to their crypto assets to their grandchildren in the future. The easiest way is to share your wallet with your family using multisig wallet. So if something happens, your family can still access the crypto assets you own.

Conclusion

Securing digital crypto assets requires precision and vigilance, securing digital assets is a new way and has only become a part of human life in the last 50 years. There are many innovations to secure your crypto assets so make sure to stay up-to-date with the latest developments.

Author:Dea Rezkitha