The recent $40 million-dollar Binance hack sent a sombre message through the crypto-community putting emphasis on the importance of security. Many holders are now questioning the safety of crypto wallets and exchanges. So, how do you use your wallet securely and safely? How do you avoid or mitigate the chances of being hacked?
Crypto wallets store public keys and enable users to monitor their balance as well as send/receive digital assets. A hot wallet or hot storage is always online and used if you want quick access to your digital assets. When you put your digital assets on an exchange, its typically stored in a hot wallet, which is always a risk due to the possibility of the exchange being hacked, like in the case of Binance. Cold wallets or cold storage is always offline therefore an ideal way to store large amounts of digital assets securely.
Back to the question of the security of these wallets. Here are five great tips to follow to secure your funds in crypto and use your wallet more safely.
1. Keep Large Amounts Offline
Only keep what you’re willing to lose on an exchange and store the rest. Always use two wallets, a hot wallet for trading and transactions and a cold wallet for safely storing the bulk of your assets. It is always best to only have what you know you will be using or trading immediately in a hot wallet.
2. Store Private Keys Separately
When storing your private keys, it is important to store them offline as well as keeping multiple copies in case one of them is lost. There are many ways to store your private keys, such as a hardware wallet (i.e. Nano Ledgers, Trezors), or writing the keys out on a physical piece of paper to put in a safe place, or storing them on another device like a desktop. You should always store your keys in three different ways. You should store two on devices with the third in a safety deposit box or somewhere secure.
3. Use Multiple Exchanges
To mitigate potential loss, particularly for active large portfolios or holdings, it’s a good idea to use multiple exchanges. If an exchange gets hacked or shuts down for some reason, and all your assets are on that exchange, you’ll lose it all. If you use multiple exchanges, dispersing part of your holdings on each, you are better managing this possible risk.
4. Use A Two-Factor Authenticator
Two-factor authenticators, like Googles 2FA, are apps you install on your phone that will provide stronger security when logging into sites containing your wallet. The 2FA app will generate a one-time password that changes every 30 seconds providing an extra layer of security to your wallet.
5. Double Check EVERYTHING
Phishing is one of the main ways’ wallets are compromised. Hackers will set up fake domains or fake emails to trick unaware users into giving them their wallet information. It is best to always check the domain of the site you are on to ensure it is accurate before entering your wallet information. Hackers also send emails posing as tech support asking for your wallet info, so always check the email address and ensure the authenticity of the sender. Legitimate exchanges will never ask for your password.
In the end, when using an online wallet there will always be risks that you won’t be protected against.
Following the Binance fiasco, you may feel wary of wallets and even crypto exchanges. If you use them properly, securely with common sense you can avoid becoming a victim of hackers and keep your crypto assets safe.
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