Protecting Your Coins – You Can Never Be Too Careful

You may think that encryption is secure, but hackers know how to crack it

by Hristo Gueorguiev
18 May • 4 min
In Tech

Being a proud owner of Bitcoin (BTC), Ethereum (ETH) or any other altcoin, one of your first concerns is how to safeguard your private keys and passwords. The only reason why someone else can access your account is because they successfully got your key.

Basic security

Everything on the web is vulnerable to hacker attacks, including your online wallets and private keys – never leave them unattended or post them in any thread or wallet address box. Another way of stealing your datа is through email links or pop-ups to potential phishing sites and virus downloads.

Beware of keylogger viruses that can read what you type and steal your passwords. Set the history on your computer to delete after closing the browser and use strong and different passwords for your accounts. It is a good idea to use a 2FA password.

Avoid clicking suspicious links sent to you by private messages or shared on any social media sites, and be careful when logging into the web. For more security, you can add blockfolio or imtoken to your phone. Invest in a good antivirus plus malware and an enhanced security system.

Hot storage vs Cold storage

Hot storage means that your device is connected to the web and can be easily hacked. If necessary and for convenience use it for small amounts of coins. It is preferable not to use online wallets, cloud storage like Dropbox, and Google Drive for big amounts of money. It is preferable to access websites through bookmarks or by directly writing the address than through Google, which is easy to use but you might be giving hackers your money on a platter.

CoinBase, one of the major US exchanges based in San Francisco stores up to 97% of its coins in hardware or paper wallets, which are regarded as "cold storage". A paper wallet is a document containing all of the data necessary to generate any number of Bitcoin private keys.

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Plug in your old computer or Raspberry only to use it for crypto transactions. Don’t treat online wallets or exchanges as your personal wallet. It is a good habit to use a usb-flash drive or paper instead.

Keep your coins away from the exchanges. Use them for their purposes – manage your cryptoassets. Even huge exchanges like Bittrex get attacked. Last month cryptoexchange CoinSecure lost 438 Bitcoins in a hack.

Obviously, the best way to secure your wallet is to print it on paper usually in QR form. It can be pacoper, plastic or any other material as long as it is durable. They are generated by programs and the public and private keys are unique.

Some of the popular generators are WalletGenerator, BitcoinPaperWallet, BitAddress, PiperWallet and K-7 Wallet Generator.

Hardware wallets

They come in different shapes but commonly look like a usb drive. Get a hardware wallet from the manufacturer – not a reseller and never use a second-hand hardware wallet. They usually can be restored, but it is still safer to make a backup copy.

There is a variety of hardware wallets you can use like Ledger Nano S – supporting multiple addresses for each currency you use, Trezor – the multicurrency supporting wallets with signature signing, KeepKey which supports 12 word recovery sentence and is PIN protected, Cryo card - made of stainless steel, Cool wallet which is as big as your credit card and can fit into your wallet, multi-signature wallet Case, DigitalBitBox supporting multi-signatures, OpenDime and many others which have different extra features and settings.

Restoring cold storage wallets

To extract your cryptocurrency from cold storage, you have to import the private key into an online wallet. When you do, beware that now you are exposed to all the security risks existing with hot wallets. Do not keep your virtual coins in such storage longer than the minimum time possible. Now it is a good idea to set-up a new paper wallet in case the old one is compromised.

Even though no method is entirely free from hazard, storing coins offline drastically reduces the chances of losing your investment.