People initially thought cryptocurrencies would be a fad that quickly faded away. Critics continue to be surprised when they see these currencies meet and exceed all expectations. However, this rise in popularity comes with a significant drawback. Hackers find cryptocurrency to be an easy target, particularly when it comes to new investors. How can a person secure their cryptocurrency to keep it safe from cybercriminals?
Hot Wallet
Investors access hot wallets with the help of connected devices. A hot wallet generates a private key for the user’s crypto online, and exchanges offer this secure storage. The user doesn’t hold the private key needed to access the wallet. The exchange has security measures in place to ensure a user can store their cryptocurrency safely and easily while still having access to it when they want to complete a transaction. Furthermore, the exchanges provide additional security in the form of licenses and service regulations to remain in compliance with local rules and guidelines. Visit Coinbrary to learn more about security measures.
Bitcoin remains one of the most volatile assets a person can own today. Investors looking to chase short or mid-term swings often find they must take care to store their wealth in a safe manner. Individuals wanting to enter the market may find they benefit from storing the funds in an offline market rather than a hot wallet.
One thing to consider when choosing where to store cryptocurrency is security. Individuals who choose to use a hot wallet offered by an exchange may find they lose their funds if the currency or company goes under. When this happens, the coins are lost.
Nevertheless, many exchanges tightened their security following major hacks of exchanges. They now offer cryptography and third-party audits to help customers feel confident when it comes to the safety and security of their coins. In addition, some exchanges put anti-fraud systems into place. Individuals who currently trust their fiat money with a bank will probably find they can trust an exchange with their cryptocurrency and not worry about it.
Cold Wallet
Many individuals, however, prefer a cold or hardware wallet. This offline wallet remains disconnected from the internet, so cybercriminals lack access to it. This wallet holds the user’s address and private key on a hard drive, paper, or software. However, people must be aware of the drawbacks associated with this storage option.
Cold wallets only allow for the storage of certain currencies, including popular ones like Bitcoin and Ethereum. Individuals looking to get in on the bottom floor of a new cryptocurrency will need to find another storage option. For those who choose to store the cryptocurrency in a paper wallet, a loss of the wallet leads to a loss of the coins.
Owners often choose to use both methods when storing their cryptocurrency. When doing so, they should take extra precautions to ensure the currency remains safe. Individuals using hot wallets need to ensure they back them up regularly. If the computer fails, the coins won’t be lost. Many people use a hard or USB drive and secure it with a strong password to protect their assets. Furthermore, the user must keep their software updated, as hackers know how to exploit any software that is outdated. By taking these measures, cryptocurrency owners find they can keep their coins safe.
