Bitcoin, Ethereum and Co .: How you can protect your crypto wallet
Anyone who has ever bought tokens for cryptocurrencies is probably wondering how they can best protect this investment. We give tips.
As the name suggests, crypto currencies are based on cryptographic procedures and sometimes standards. With a new wallet – this is your account – you always generate a public and a private key. How you use this private key and thus your Crypto wallet we explain to you.
Protecting crypto wallets properly
Your wallet can be located virtually with an online provider on the one hand, but also locally on your computer on the other. You should be aware of this difference, as it changes your “threat model” against theft or loss of your tokens. If you want to trade less and instead want to make a long-term investment with occasional payments, the local wallet is worthwhile.
You should definitely consider a “threat model”: Which events make the loss of your crypto tokens more likely? Say, how are you going to protect your tokens?
Increase the level of protection of your local crypto wallet
Local wallets are stored as a file on your computer. These files can then be opened by special software. With this you can check how many coins you still have to send and receive. These five tips will help you to increase the level of protection of this file:
- Activate hard drive encryption on your computer. In the event of theft, the memory cannot simply be read out.
- Make a lot of encrypted backups. It is best to distribute your backups in different places. This can be a USB stick, which, similar to hard disk encryption, can only be opened with a passphrase.
- Print paper wallets. This means that your private key – also known as the seed – is on a piece of paper. Since this is then easier to see, you should keep this piece of paper well: for example in a bank safe.
- Buy a steel wallet. There are many different models of this. “Steel wallets” are usually steel rings or plates in which you engrave the seed. Thus, your crypto wallet is protected against many environmental influences and is therefore safer than paper in this respect.
- If you have a good memory, memorize the seed – a list of English-language words. Then you are only susceptible to the so-called “rubber hose” attack. What is that? Well, if someone wants to pull a garden hose over your head.
Protect your online crypto wallet well – simply explained
Your crypto wallet can also be located online at an exchange. Then you have a completely different “threat model”. Unfortunately, you cannot protect yourself against a theft that happens in front of the stock exchange. But you can protect your account quite well. The following four tips will help you:
- Enable two-factor authentication. So you always have to confirm your login to the exchange with a one-time code.
- Choose very secure and unique passphrases. It is more important that the passphrase is long than that it becomes illegible. What is the first sentence of your favorite book? Add another date that you can easily remember and you have a good passphrase. Just don’t tell anyone.
- Find out which exchanges have been hacked before and which ones have the best conditions for you.
- If necessary, export your tokens locally and apply the tips above.
Conclusion: You have different options
We hope these explanations and tips have helped you. Basically, the most important thing is that you always stay informed. We also explain to you: What is the difference between a token and a cryptocurrency? And why you even need a wallet to use a crypto currency.
Sources: own research
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