The Importance of Security in Choosing a Crypto Wallet
When you enter the world of cryptocurrency, one of the most important steps is to step away from it by choosing a secure crypto wallet. As everything in the digital world, cryptocurrencies are inherently exposed to different security risks that can jeopardise your holdings. In this blog post we will cover why paying attention to security is essential when choosing a crypto wallet and what features to look for to keep your investments safe.
Understanding the Risks
It’s important to understand these risks before discussing the security implications of crypto wallets in any detail. One key reason is that cryptocurrencies are not a form of money – at least not yet. Cryptocurrencies circulate on decentralised networks, and don’t have the backing of any ‘too big to fail’ financial institution. Crypto payments are made through a peer-to-peer network. So there’s no insurance scheme (so far) that will reimburse you if someone steals your money or you lose it. The main dangers include hacking and phishing, as well as physical theft of hardware wallets. These dangers mean that security is one of the most important considerations when deciding where to keep your digital money.
Types of Crypto Wallets
Crypto wallets come in a range of styles, varying in terms of the degree to which they make you vulnerable: The most common types are:
- Hardware Wallets: By some accounts the safest, these devices keep your private keys on an offline physical device.
- Software Wallets: Available on your computer or mobile device, but more susceptible to threats online.
• Paper Wallets: Where you print your public and private key on to paper and store it in a safe place.
Whether you go for or not depends on what you need the wallet for and how much security you want.
Key Security Features to Look For
When selecting a crypto wallet, there are several security features to consider:
- Two-Factor Authentication (2FA): Provides an additional level of security by requiring you to provide two forms of authentication, beyond your password.
- Multi-Signature Support: This feature mandates the requirement of multiple keys to authorise a transaction – in case of theft of one key, the other key or keys can cancel it..
- Keeping it up to date: Keep the wallet software up to date to defend against vulnerabilities that have been identified.
- Reputation: Research and select wallets that have a good reputation and citizen reports of good experience with the wallets from the community.
Don’t neglect a user-friendly interface and responsive customer service, which can make a big difference in the security of using and maintaining your wallet.
Best Practices for Wallet Security
Alongside choosing a safe wallet, you will take additional measures to keep your money safe, such as:
- Make a Backup of Your Wallet: Regularly make backups of your wallet and store the backup in a safe place away from your primary wallet.
- Create Strong Passwords: Use complex, unique passwords for your wallet and any accounts you may have to manage it.
- Keep Your Private Keys Private: Don’t share your private keys with anyone. This is equivalent of giving someone your bank code.
- Follow the news: Know the shape of current security threats to cryptocurrencies and how to deal with them.
If you understand the risks and choose a secure crypto wallet, you can minimise the chances of losing your hard-earned bitcoins and other altcoins to cybercriminals. Investing in a secure wallet means investing in the safety of your digital finance.
But, after all, it’s up to you to protect your crypto, mostly. Be careful.
