Safeguarding Your Cryptocurrency - dummies

Safeguarding Your Cryptocurrency

By Tiana Laurence

Part of Blockchain For Dummies Cheat Sheet

Cryptocurrencies have captured the imagination of the public, but the cryptocurrency world is a proverbial Wild West of benevolent pioneers ready to help you find your way and crazy bandits who want to take you for all you’re worth.

Cryptocurrencies are most vulnerable in centralized digital systems that have access to the Internet. This includes online wallets, exchanges, wallets on your computer, cloud storage of private keys (digital key used to secure your tokens), and mobile applications.

To prevent theft of your cryptocurrencies, use cold storage (an offline archive of your private keys). Top cold storage methods include an offline hardware wallet, a USB drive, or a paper wallet.

Because cryptocurrency operates on open blockchain networks, there are a plethora of ways someone can take your money, track your spending, or violate your privacy. To prevent this form of theft, follow these tips:

  • Use multiple wallets. There is no restriction on the number of wallet addresses that you can use. Some people generate a new address every time they send or receive cryptocurrency.
  • Only keep small amounts in a web wallet. Web wallets are targets for hackers, only keep a small amount in each one. Wallets on your computer are also vulnerable. Use cold storage to hold large amounts of cryptocurrency.
  • Don’t share. Never share your private keys for your cryptocurrency with anyone. Doing so gives them full access to your funds.