How to Keep your Cryptocurrency Investments Safe

It seems like not a day passes by without hearing about how someone had a bunch of bitcoins and lost it due to a hack or misplacing credentials when they became really valuable! Imagine the fate of this guy, who was extremely lucky enough to recover over $200,000 (over 1.25 crore rupees in value when this article was written) worth of bitcoins!  As cryptocurrencies aim to replace traditional banks, it is important to have bank-grade security for your investments in cryptocurrencies. Here are some of the best ways to keep your digital assets safe and secure.

Wallets are probably the key step in keeping your digital money. However, it is important to understand that bitcoins are not an object that you store. It is a secure address on the blockchain for which you own the key to. This unique key is what needs to be kept secure in wallets.

Cold wallets are wallets that are not connected to the web and are a lot more secure opposed to hot wallets which are connected. We highly recommend that investors keep their investments in cold wallets and their spending/trading investments in the hot wallets. You can use the following type of cold wallets:

Hardware wallet

Hardware wallets work on the premise that a device that is not connected to the internet cannot be hacked into. It is like an isolated device that connects to the internet when you need it to send or receive money and disconnects when the transaction is completed. Trezor is one of the more popular hardware wallets that investors can use. Ledger and Keep key are others. These look like USB thumb drives and are secured with a PIN and/or a password called “seed”.

Hardware wallets are perhaps the most secure ways to store all your crypto currencies, but your investments can be as good as gone if you ever forget both your PIN and “seed”. If you do not want to invest in a hardware at this point, you can also consider a paper wallet.

Paper wallets

As the name suggests, it really is just a piece of paper! Print your public and private keywords on a piece of paper, store it safely somewhere and make sure you do not forget where that is. Easy! This is a good option if you do not intend to use your bitcoins for a long time. Protecting the paper from the forces of nature, remembering where you kept them and preventing family member from throwing them out are some of the risks that need considering for these type of wallets.

Hot wallets

You can store your trading investments in a hot wallet provided by your trading platform. In India, platforms like Coinome, backed by billdesk, provide secure wallets where you can store your cryptocurrencies.

We also recommend following a few fundamental practices to ensure safe storage of your investments:

* Always use 2FA authentication along with a strong password manager for all your accounts

* Choose only reputed wallet providers and use them after reviewing other user experiences to avoid unpleasant surprises in the future.

* If you use your mobile device, be careful of what you access as malicious apps can send your keys over to hackers easily.

* Keep long term investments in cold storage

* Do not share your PIN or password with anyone you do not trust.

* Enable security for all your digital accounts.

In this age of connected devices and services, a hacker gaining access to your email or netflix can trigger financial losses and wipe out your investments in a blink of an eye. Once you have your bases, we highly recommend that you help your friends with securing their investments as well. Once the whole ecosystem is secure and less vulnerable to attacks, attackers would find it less attractive as well.

Authored by Anand Subramanian.