Better Safe Than Sorry: Simple Effective Ways to Secure Your Cryptocoins
Cryptocurrency is perhaps the safest instrument to transfer value between anonymous parties but storing and trading cryptocurrency can be a risky affair.
Cryptocurrency is perhaps the safest instrument to transfer value between anonymous parties. But storing and trading cryptocurrency can be a risky affair. As a digital crypto-asset, it does not have to worry about the many usual issues vexing paper money but faces challenges unique to fintech industry.
The most popular way of storing cryptocoins is a software wallet. Digital wallets are easy to use and practical but how secure are they? If your hard-earned cryptocoins are stored on your PC, then your assets are only as secure as your computer itself.
Basically, protecting your software wallet is no different from safeguarding any sensitive data on your PC. You should be a bit extra paranoid when surfing the net and never store your passwords in an unencrypted file on the same machine as your wallets. Ideally, you should store your passwords offline or not store them at all (brain-wallets!) and install your wallets on a device you do not use for day-to-day browsing and downloading.
Another popular solution is Linux operating system, which is believed to be almost impervious to hackers and viruses. You don’t even have to install Linux instead of Windows, it can be booted on your PC when necessary from a USB stick.
Then there is cold storage. Cold storage takes security up a few notches and basically means keeping your altcoins in an offline wallet, effectively restricting any attempts of unauthorized access to it.
Cold storage wallet is usually created on a device that is never connected to the Internet, like an old offline laptop or a USB stick. Not many people know that a cold wallet can not only be maintained offline but can even be created offline. You do not need to connect the device to the Internet to install a wallet, generate keys and send the coins. Such wallets are perhaps the safest ones.
As far as offline wallets go, hardware wallets are the most convenient and secure solution. Hardware wallets are portable devices designed specifically for storing cryptocurrency. Basically, they are USB sticks with simple and secure software and several layers of cryptographic protection.
Now cold storage is great for storing your assets, but sooner or later you will need to move your coins online and that is when you face some completely different security issues.
Trading and purchasing
Emerging crypto-shopping requires us to find a suitable way of keeping assets online and easily accessible.
Many users create a “hot wallet” to take care of routine day to day transactions and a “cold wallet” to store the bulk of their assets, only occasionally accessing it. This approach was also adopted by many exchange websites. Even if you do not consider yourself to be a crypto-trader, at times you will need to exchang