One of the most exciting features about cryptocurrencies is how they cut out the middleman. No corrupt banks taking advantage of your hard earned money. No issues with fiat inflation. The cryptocurrency you own is truly yours, with no other 3rd party having a claim on it. It is one of the most exciting technological innovations of the century.
One of the downsides to the lack of regulation in the crypto markets is security. Their is no one but yourself who can protect your capital. This means that if your going to own crypto, you MUST take your own security measures to protect the cryptocurrency you own. Here are some must-do cryptocurrency security tips:
Having just a password on the computer or device where you store cryptocurrency is not enough. The most advanced hackers these days can crack a weak password in a relatively short period of time. Having a long password with a combination of letters, numbers, and symbols is a must. You will consistently find the most advanced hackers in the crypto space, so you have to have more security than just a password on your cryptocurrency exchanges and wallet.
An easy way to significantly upgrade the security around your cryptocurrency is to use two-factor authorization. 2FA will add in an extra layer of security on top of your password. SMS 2FA is a good start, but using Google Authenticator is even better. This is a software token that implements 2FA services using a time-based one-time password algorithm (TOTP). Authenticator provides a 6 to 8 digit one-time password which users must provide in addition to their username and password to log into their exchange or wallet. It is one of the best security solutions out there in our opinion. Here is a diagram of how it works on Binancce:
NEVER Give Out Your Private Key
This seems like common sense to most people in the crypto community, but newbies will fall for this. A lot of crypto phishing on social media occurs from scammers DMing people asking for their private key to send them cryptocurrency. They will impersonate prominent figures or companies in the crypto community and DM you on Twitter or Instagram asking you for your private key so they can send you crypto.
Someone recently impersonated Kunal Desai’s Instagram and was DMing people who followed his real account for their private key, and also asking for them to send crypto to a random address in exchange for more crypto. These people will copy the profile exactly, and just make a small tweak to the username that can easily be overlooked (the person made their Instagram username Kunal.00 instead of Kunal00). Do not fall for this!
Cold storage involves storing your cryptocurrency offline. Keeping your cryptocurrency offline significantly reduces threats from hackers. Some effective ways of using cold storage is using a hardware wallet, which is just a cryptocurrency wallet that stores your private key on a hardware device. You can also use a paper wallet, which just has a QR code that is kept offline that is used to make crypto transactions. Hardware wallets tend to be the preferred choice of cold storage, as most hardware wallets are water and virus proof, and some even offer multi-signature transactions.
A great hardware wallet is the Trezor.
A multi-signature wallet requires several private keys to authorize crypto transactions. The multi-signature address structure lets you split those private keys across multiple devices, greatly increasing the security of your wallet. A hacker would need all of your private keys to access your wallet, which is much more difficult to obtain with multisignature security. However when using multi-signature security you have to make sure you securely backup all of your copaying private keys. Here is a diagram of how it works:
Wallet backups protects your cryptos against hardware, computer, or software failure. If one of these failures happens to your cryptocurrency wallet and you haven’t backed it up, your cryptocurrency will be gone forever. You can backup your wallet into a single file called wallet.dat if you have a digital wallet.
When you have a hardware wallet you have to store it in place you will remember it. If you misplace a hardware wallet, you should use your wallet’s mnemonic seed to add an extra layer of backup. Every wallet has its own unique seed. These are a group of words you can use to restore your hardware wallet in the event of a hardware failure, and maintain possession of your cryptocurrency.
In Case You Missed Day 2
If you missed day 2’s post about the best exchanges to trade on, check it out here. Make sure to sign up for our weekly newsletter below where you will get everything traders and investors need to know about the crypto market in an easy-to-understand, bite sized chunk.
Bulls on Crypto Street is a trading education website dedicated to digital assets such as Bitcoin, Ethereum, DeFi, NFTs, and other new advancements in the Metaverse.