As with anything involving value, it’s always important to secure it at your utmost best. Cryptocurrencies are no different. The importance of storing your digital assets in not only a safe location, but also with the best tools, is how your possession over them is defined. Let’s explore how to protect your cryptocurrency portfolio.
The Importance Of Protecting Your Crypto
There are many horror stories out there of people losing thousands if not millions of dollars worth of cryptocurrencies due to lost keys. In August 2010, a man identifying as “Stone Man” reported on a Bitcoin forum that he had lost 8,999 BTC in a technological error. At the time this was worth roughly $600 but with today’s value that equates to around $95.5 million.
Thankfully the network has gone through significant upgrades since then so this is unlikely to happen again and be an issue. What’s more possible is a hacker getting hold of your private keys. Think of your wallet keys as your bank account, the public key is your bank account number that allows anyone to send you money, whereas your private key is your pin number that allows you to access the funds. As you wouldn’t share your pin number with anyone, don’t share your private key.
However, consider storing your private keys in a very secure location that should something happen to you, your loved ones can still access your cryptocurrency portfolio. A more recent incident involving the loss of $109 million worth of funds in 2019 was due to one of the co-founders not having shared his private keys. QuadrigaCX was one of the biggest Canadian crypto exchanges and following the death of one of the co-founders, had to file for bankruptcy, losing millions of dollars worth of clients’ cryptocurrency. While controversial, this story nevertheless makes an important point: keep a backup of your private keys somewhere where it could be recovered.
How To Protect My Cryptocurrency Portfolio
Now that you understand the importance of keeping your cryptocurrency portfolio in a secure location, let’s look at what steps you can take to ensure the safekeeping of your digital assets. Here are 5 points to consider when keeping your crypto safe:
Use A Secure Wallet
Make sure the wallet that you choose to store your cryptocurrencies is from a reliable source. Look into the company behind it and read reviews, many “wallet” companies have created apps for easy download but turn out to be scams later. Experts recommend using regulated exchanges due to them being more likely to have proper safety mechanisms in place.
Do Your Own Research
Commonly referred to as DYOR in the industry, doing your research on the various types of cryptocurrency wallets is a good idea when deciding how you want to store your funds. Each wallet type has its pros and cons, so find one that works best for what you are planning on doing with your crypto (e.g. day trading or long term hodling).
Read more: How To Research Cryptocurrency
Don’t Keep All Your Eggs In One Basket
As the saying suggests, don’t store all your cryptocurrencies in one place. By utilizing various storage options, should something happen to one of them you won’t lose your entire investment. By using this secure risk management strategy you’re less likely to experience major setbacks should something happen.
Use Strong Passwords
Don’t use the same password you use for social accounts, and avoid using the same password twice. Aim for something memorable that’s hard to forget, and use a mixture of letters, numbers, symbols and upper- and lower cases.
Only Use Trusted Networks
You wouldn’t go and do all your internet banking in Starbucks, and the same goes for crypto banking. Don’t use public networks to check up on your funds, anyone could intercept your activities and redirect your funds. Always use your personal computer and do so in the comfort of your own or a very trusted network.
Keep Your Crypto Assets Secure
When looking into how to protect my cryptocurrency portfolio, here are the 5 core elements you should be looking at. Of course there are other ways to keep your digital assets secure, but this offers a good base. Here at Oobit we take security very seriously which is why we’ve partnered with top cyber security experts to offer our users access to a military-grade online wallet. The wallet stores funds in an “air-gapped vault” that is locked away tightly, a revolutionary product in the blockchain industry. Whatever path you choose, ensure that you are always maintaining an optimal level of security.