Every other day, we hear people talking about new scams here and there. Even the crypto market is not safe from such hazards despite its decentralized and anonymous grid. Mostly, there are stories about investors purchasing cryptocurrencies like Bitcoin and then losing all of it, not because of the market fluctuations, but simply because of misplaced private keys.
The Basics About Hardware Wallets
If you have just started transacting in cryptocurrencies, you must be concerned about the safety and security of your coins. If you have held your coins for long, it is about time that you upgrade the storage setup and switch to a hardware wallet.
A rudimentary step to ensuring the security of your cryptocurrency (whether you have purchased or mined it) is to store it in a hardware wallet. It looks similar to a USB drive and locally stores the private keys offline. You need not be connected to the internet to operate it. Experienced investors suggest that you transfer your coins to a personal wallet instead of storing them in digital wallet applications on the phone/desktop or in cryptocurrency exchange platforms. The internet, which is accessible by anyone and everyone, provides a number of inroads to attackers who are all so ready to gain access to your wallet. You may be tricked in multiple ways to give them access.
‘PIN’ and the ‘SEED’
A secure wallet such as Ledger Nano S or Trezor which has a direct setup will cost you around $100 or even less. You simply pick the PIN number and the secondary “seed” (a recovery password consisting of words and integers). If you forget the PIN, or the wallet stops functioning, you can use the ‘seed’ to restore it. It is a robust security, meant to ensure that you keep a copy of your PIN and your seed at a place available to you. Recovering the money kept on the hardware wallet in case you lose the PIN as well the seed is entirely impossible. It is thus, advisable to keep a proper backup of your ‘seed’ to ensure security.
Your setup need not be a fancy one. You may keep a backup for your currency on an external storage system such as a moveable hard drive. However, you must ensure that the data is encrypted to avoid any kind of loss in the event that the device gets stolen or lost.
Loopholes in the System
The essential drawback of a hardware wallet is it makes the validation of transactions somewhat unmanageable. In the event that you need smoother access to your digital currency, specialists recommend putting away a small portion of the currency in a wallet application to encourage low-value exchanges. The key here is to keep only the amount that you are ready to lose in the application, and never provide your private key to anyone.
Applications such as the Mycelium Wallet which are basically interoperable with famous hardware wallets ensures that your setup is more stable. What’s more, some application-based wallets like the Samourai Wallet are attempting to highlight strong encryption and security features. In any case, don’t believe any application with an excess of crypto cash at the moment.
Moreover, consider storing the private key in a safe place, the hidden side of the public-private pair which gives you a chance to authorize modifications to the blockchain. Keep it encrypted all the time, and try not to leave them on gadgets that you use for different purposes all the time. Also, carefully consider your exchanges. There are huge numbers of established, dependable institutions in the market. However, gimmicky new coins are being launched every other day. Additionally, the market is bristling with sketchy ICOs which are nothing but scam projects. At the point when the digital currency OneCoin, advertised as a Bitcoin contender, was launched, individuals purchased coins worth around $350 million. Since then, it has attracted correlations with a Ponzi scheme. What’s more, individuals are being defrauded even during genuine ICO (Initial Coin Offering) sales when muggers perform phishing attacks, or fool the budding stockholders into sending cash to corrupt wallets addresses.
If you conduct a detailed case study of CryptoShuffler, you would know how this malware kept a close eye on the victim’s computer and monitored the copy/paste clipboard to get access to the Bitcoin wallet address. Even SEBI has brought up this crucial topic in many of its board meetings.
Learn the Nitty-gritties of the Business
It is the small steps that lead to the bigger picture. It is important that you maintain a secure digital life in order to defend your cryptocurrencies. Always enable a password manager, use the two-factor authentication and use enhanced security features for the email address that you are using. You can choose to turn on the latest Advanced Protection on Gmail or add defence mechanisms like a password or a PIN to devices.