How To Store Cryptocurrency Safely

Introduction

Banks are financial institutions in which people deposit their funds with monetary value. Bitcoin and cryptocurrencies were created with the goal of making banks no longer necessary. Thanks to blockchain technology, people can be sure of having full control of their money and making transfers of value without the need for an intermediary. They can also keep the coins themselves without having to physically deposit them anywhere, since they are digital assets.

 

All these advantages have the disadvantage that it is the users themselves who have to take care of keeping the cryptocurrencies with the greatest possible security by themselves. There are service providers, and there will be more and more, that offer the possibility of storage and guarantee of digital assets. However, since cryptocurrencies have the possibility of a person being their own bank , it is worth analyzing what are the recommendations to store cryptocurrencies with the greatest possible security.

Store cryptocurrencies on online platforms

We are not used to the convenience of saving our data on platforms that offer us an access system through a username and password. Cryptocurrencies offer greater security since the network is decentralized through nodes . The information is not stored on a central server of any company. If we keep our digital currencies on an exchange site, for example, that has a Bitcoin or other cryptocurrency wallet available, we are giving up the security that these types of assets offer us.

By saving our portfolio on platforms or online wallets we will be exposed to a possible fall or attack on the server by a hacker . This is the least secure and least recommended form of storage. Always remember that if you do not have the private keys, you do not really own the cryptocurrencies. In these cases, only a promise to pay is available from the service provider. This is why it is only advisable to store small amounts on online sites that we need to operate on a daily basis and always with a two-factor authenticator.

Diversification of the portfolio in different wallets according to use

In cryptocurrencies it happens as with fiat money . We usually have one or more bank accounts depending on the use we intend to give it and the available capital. We also usually keep in our wallet only the money that we are going to need, and we only go out with the money that we are going to need depending on where we are going to go. With cryptocurrencies you have to follow the same philosophy even if the assets have a different nature.

The recommended thing to increase the security of our capital is to have it distributed in different wallets. It is also important to have savings in a cold wallet and in online wallets only what we need for our daily operations or to trade .

Make a security copy

The wallets in which our cryptocurrencies are stored must be protected by regular backups. In this way we avoid problems that our computer can give us, errors that we can make such as losses, or viruses.

It is advisable to keep these backup copies on devices with different characteristics, such as a USB and a CD, and also have them on physical paper, for example. All in turn well kept in different places. It is not at all advisable to store cryptocurrencies in the long term on a smartphone for everyday use. Loss of the phone may result in the inability to access the funds or theft of the funds.

Encrypt wallets

Thanks to the encryption we can have a mandatory password for the withdrawal of funds. This type of protection is essential to prevent theft and considerably increases security. In order for the level of protection with this medium to be optimal, we must establish a password . It would also be convenient to memorize it. This must also have a length of at least 16 characters including numbers, letters and punctuation marks.

Offline wallets as the first option for savings

As we have already mentioned, the online platforms or wallets available on the network do not offer the security that we would like to store cryptocurrencies in the long term. If we buy crypto assets with the aim of keeping them for years and we have no thought of using them for trading or operating with them, it is essential to use offline wallets. These wallets are called cold storage and are the ones that offer the most security. Thanks to this type of wallet, it is possible to store cryptocurrencies in a place that is not connected to the Internet.

In recent years, physical wallets have also appeared. This storage hardware consists of small devices that only have wallet functionality. In this way, malicious code is prevented from being read by the machine and affecting our deposits.

Finally, trust your loved ones

The private keys of our wallet must be kept secret to prevent anyone we don't want from accessing them. However, it is necessary to protect yourself against eventual accidents or health problems. If no one knows where the private keys are kept, no one will be able to access the capital. It's not something we like to think about but that's life. Taking some time to think about how our loved ones could access our cryptocurrencies in case we are no longer in this world is highly recommended and will also give a sense of security.

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