Unlike fiat wallets and bank accounts, cryptocurrency wallets don’t actually store your crypto. They store keys that grant you access to your funds on the blockchain. Here are some precautions to take note of when dealing with cryptocurrency wallets.
1. Get a suitable wallet.
3 key criteria for determining which wallet to choose would be the amounts you invested, coins supported and your usage patterns.
2. Never roll your own crypto.
Don’t device schemes or implement security measures beyond your ability. You will fail big time. This happens often when the topic of securing your seed phrase comes up.
3. Guard your seed phrase like you would your life.
Lose this and your funds could go missing. Forever.
4. Avoid using paper wallets.
They are theoretically very secure but impossible to safely generate.
5. Use deterministic wallets.
Easier for backing up and improves privacy.
6. Do not unlock wallets unnecessarily.
The longer such wallets are exposed to the internet, the more likely they are subject to an attack.
7. Compartmentalize your funds into different tiers.
Mobile wallets for daily use, hardware wallets for infrequent use.
8. Diversify, diversify, diversify.
Areas where you can diversify include using different wallet providers and spreading your funds across multiple wallets.
Want to know more about protecting your crypto when using cryptocurrency wallets? View the full article on How to Secure your Cryptocurrency Wallet
. It contains easy to follow steps on how to use your cryptocurrency wallets safely. There we further explain each of the above points in greater detail. Additional tips can also be found on that page.
In the next part of this series, we would discuss cryptocurrency exchanges (click here)
Have other security tips to suggest? Did we miss something? Leave them in the comments below and we will update the list.