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The Complete Guide To Securing Your Crypto Wallet

Originally published on Best Stocks

Source: Getty Images


People have different opinions about the future of crypto. If you’re reading this article, you probably lean towards the side that’s a bit more optimistic. Regardless, holding or trading crypto has become quite popular.

While crypto wallets are significantly safer than other forms of transaction, that doesn’t mean they are impenetrable. There have been cases where people’s crypto wallets were hacked,

leading to significant financial losses. So, how do you avoid that?

How do crypto wallets work?

To understand how you can secure your crypto wallet, you first need to know how it works.

Crypto wallets can come in the form of software or hardware. Regardless of their format, they work in the same way.

However, unlike regular wallets that physically store your cash, crypto wallets don’t keep actual cryptocurrency. Instead, they store private and public key information necessary to carry out

crypto transactions.

Public key information is like your credit card number. That information alone isn’t enough to execute transactions. However, if someone has your private key, they essentially have access to

the crypto in your wallet.

What wallet type is the safest?

Not all wallets are made equal, at least when it comes to security. For example, while software wallets are more convenient since you can have them on your phone, they also have more security vulnerabilities. But that doesn’t mean that hardware wallets are immune to problems.

Software crypto wallets can be further categorized into:

Hosted wallets – the most popular as they’re the easiest to use. They are built into the crypto exchange you use to buy or trade. The exchange holds the private key for you with hosted wallets, making it vulnerable to hackers. A popular crypto exchange recently suffered a cyberattack, causing damage to thousands of users.

Non-custodial or third-party wallets – these offer more freedom as you have access to your private key. However, if you lose or forget the key, you won’t be able to use your crypto. So it’s crucial never to share the key with anyone.

Although hardware wallets aren’t susceptible to hacking, they still have some security concerns. The main risk is losing or damaging your wallet. You can also forget the security key to unlock it.

Securing your crypto wallet

Now that you know how a crypto wallet works, it’s time to explore a few ways you can protect it from outside threats:

Use secure wifi

Since crypto trading and transactions require an internet connection, you need to ensure the security of the connection you’re using. Specifically, you should never do anything crypto-related on free, public networks like your local cafe’s wifi.

Even if you’re on your home network, an extra layer of protection won’t hurt. For that, you could use a VPN. The VPN will encrypt everything you do, which will significantly bolster the security

of your crypto wallet.

Set a strong password and use MFA

Enable all security features when setting up accounts for your crypto exchanges and wallets. Set strong, complex passwords and change them regularly. If you have more than one wallet,

use a separate password for each.

2FA (Two-factor Authentication) is an excellent way to bolster your wallet’s security. However, after recent incidents, most exchanges now require MFA (Multi-factor Authentication) to maximize safety.

Recognize phishing attempts

Phishing is the most common tactic hackers use in crypto scams. Crypto phishing attempts can

happen everywhere: email, social media, or SMS.

With crypto phishing, scammers try to get potential victims to make a purchase or give up their private key in exchange for a “benefit.” They do so by embedding harmful links or attachments

into messages that appear to come from a legitimate source.

To prevent yourself from falling victim to phishing, think twice before clicking or downloading anything from an email or message. Especially if it’s coming from a company or individual, you have no history with.

Source: Getty Images

Protect your devices

Your crypto wallet is only as safe as the devices you use it on. To protect your devices from security vulnerabilities, update them regularly. These updates contain crucial fixes that will make it impossible for hackers to exploit known vulnerabilities on your device.

Operating systems nowadays come with solid built-in antivirus and firewall protection. Make sure they’re always enabled, especially when using your crypto wallet. You can also look into

installing third-party antivirus software to improve security scanning and protection further.

Conclusion

If you like using crypto, you have to learn how to protect your crypto wallet. The first decision you need to make is the type of wallet you want to use. All types have their advantages and

disadvantages.

Once you set up your wallet, you should protect it with a strong password and MFA. Avoid using your wallet on public networks, and always look for phishing attempts.

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