As this digital and technical world is growing, concern for safety and security is also increasing. Almost every day, we hear about the violation of ransomware and hacking. So, as hacking is increasing day-by-day, there is a need for increased safety and security measures. Cryptocurrencies are secure as they use blockchain technology. But what about your crypto wallets? There are some risks involved while using digital wallets, and some traders are not aware of this. So, in this article, we will be learning how to keep digital wallets safe and secure.
A digital currency wallet is a paper, device, software or a service which stores public and private keys of a user. It allows users to send and receive cryptocurrencies, monitor balance, and track ownership by interacting with different blockchains. You need to have a crypto or digital wallet in order to use any digital asset.
How Does Crypto Wallet Work?
Many people are there who use digital wallets, but there is also some confusion and misunderstanding about how they work. Storing coins in crypto wallets is not the same as storing fiat currencies in traditional wallets. Digital currencies are not stored in a single location as they do not exist in any physical form. All that is stored are records of transactions, on the blockchain network.
When a virtual currency is sent from one user to another, they basically pass on the ownership of that asset to other person’s wallet’s address. After that, when you want to spend those assets, the private key stored in the wallet and the public address of the asset should match. When the private and public keys match, this increases the balance in the digital wallet of receiver and balance in senders wallet decreases. No actual exchange of real currencies takes place.
How to Secure Your Crypto Wallet?
Now that we have understood what is a crypto wallet and how it works, let us now learn how to make crypto wallets secure. Following tips can make your crypto wallets secure:
Secure your wallet
Protecting and securing digital wallets is much like protecting data on your computer. You need to be a little more cautious while browsing the Internet, emails, links, etc. Find a wallet that provides more security than other wallets. Some wallets nowadays offer encryption for the protection of private keys.
Separating Your Funds
You should have two crypto wallets or more depending on your digital currency funds. Among these two, one must be used for trading purposes and the other to be used as a storage of funds and savings. Wallet that is to be used for trading and everyday purposes should contain only small amounts of cryptos and the remaining assets should be kept in savings wallet.
You need to be very careful where you go online when using a device that has your wallet. As we mentioned earlier, you need to be aware of the links and websites you click. Some websites and wi-fi networks put your wallet in danger. Also, never leave your device unattended or let anyone else use it.
It is better to enable two-factor authentication not only for login but also for any transaction procedures. Two-factor authorization is simply a double authentication for confirming your identity. This can be done in various ways- first is using Google Authenticator app which uses a 6-digit code and changes minute by minute. The second is using biometric identification such as a fingerprint. So, whichever authentication you use, what is more, important is to make your wallet secure.
Choose a Secure Exchange
Another important point is to choose an exchange that is not only easy to use and flexible but also secure and well-established. Keep an eye on the news for the latest updates of an exchange. If the experts withdraw from a project, it might be a troubling signal. You should be alert if any strange policies or continuous technical problems are taking place as these may also be a part of the concern.
Creating backups of your digital wallet is important. Backups help in saving you from any kind of hardware failures or human errors. This also makes you restore your wallet in case your mobile or computer gets stolen. Backups offer safe heaven in case of loss of devices you use to operate wallets.
Encrypting the wallet enables you in creating a password. When you create a password, it prevents hackers from withdrawing your funds or money. Choose a lengthy and difficult password that is difficult to guess or crack for any hacker.
Keeping Software Updated
Passwords and encryption protect your wallet from thieves but are not able to protect you from malware or keylogging. So, it is essential to install and keep updated anti-malware and antivirus solutions. Many software are free to use and easily available.
So, now we know the different safety measures to keep our digital wallets safe and secure from any kind of hacking. Your wallets act as your safe for digital assets. If lost, it could result in losing all your savings. It is very important to make your wallets secure to prevent yourself from facing losses. This guide will not only be beneficial for beginners but for professionals as well.