Virtual currencies such as Dogecoin, BitCoin and LiteCoin are all the rage. Yet, when it comes to keeping your wallet safe, many people don’t take the necessary precautions explains Brian Colombana. Here’s a rundown of what you need to know to stay on top of your digital currency.
Take Control: It’s Your Money. Here are 5 Key Tips:
First and foremost:
You can’t “lose” cryptocurrency if no one else has it in the first place! The only way they go missing is if you fail to keep them safe. This means safeguarding any device that is used for transacting cryptocurrencies online (computer, smartphone, tablet, etc.) by using antivirus software with a firewall, updating security patches, enabling two-factor authentication, etc.
Centralized Exchanges vs. Peer-to-Peer Trading Sites
The most common way to purchase digital currency is through a centralized exchange service like CoinBase or BTCe. These sites are easy to use and usually reliable, but they are also the most vulnerable points of entry for hackers looking to get their hands on your cryptocurrency stash. The more exchanges you use, the higher the chance of getting hacked (or scammed).
MtGox is already crashing, while another exchange called MintPal just recently got “hacked.” Brian Colombana says if you’re going to trade between different cryptocurrency types it’s best not to do so on an exchange at all–instead, find a peer-to-peer trading site like Crypto Thrift, which allows users to post advertisements to trade one type of digital currency for another.
You Can’t Hack What Isn’t There
Another way to keep your wallet safe is by using a paper wallet, which involves printing out all of your cryptocurrency information and storing it in a secure place offline. One problem with this method is that if you lose the printed copy there’s no getting it back—but that’s where a third key comes into play. By keeping a “hardened” version of your private key backed up on a flash drive or even written down on paper, you can ensure its safety from being lost as well as from being hacked.
In order to make it harder for criminals to access your wallet, you should use a different password for every exchange and platform you use. This way, if one gets hacked your other accounts are safe from being compromised as well explains Brian Colombana. In addition, using two-factor authentication adds an extra layer of security to important accounts such as email or Facebook that typically do not support this functionality by default.
Cryptocurrency Exchanges Are Not Banks
While some centralized exchanges have been hack in the past, the same cannot say for all cryptocurrency trading sites. However, whenever you give money to a third party it’s always a good idea to limit the number of funds you keep there–just as you would at a bank or any other financial institution. The last thing anyone wants is to see their hard-earned money disappear.
Don’t Commit the Same Mistakes Twice
Once you’ve taken all of these steps to keep your virtual currency safe, it’s also helpful to other users by uploading a copy of your encrypted wallet backup to the website Proof Wallet, which will store an extra copy online for free. This way if something happens and Crypto Thrift or another platform closes down, you’ll still have access to your account on another site. Lastly, even though cryptography is about as secure as it gets in terms of data encryption, there are no guarantees that criminals won’t be able to intercept your information somehow—so always take appropriate precautions just in case.
Q: How do I set up two-factor authentication?
A: If you are using Google Authenticator for your 2fa, install it on your smartphone. Then log into the exchange service you choose to use, select “account” and “security settings.” Finally, click the box next to “two-factor authentication” so that a checkmark appears in the box. Once this is over, open up Google Authenticator on your phone says Brian Colombana. With the application open, press the menu button followed by “scan barcode”. Your barcode should then appear within the application—scan it with your phone’s camera now. You will then be given a secret key. That will be use as an extra layer of security when accessing your account from now on.
Q: How can I make my password more secure?
A: A long, randomized password composed of upper and lower case letters. Numbers and symbols is much harder to crack than a short one. This simple change will lower your chance of getting hacked exponentially. Better yet—use a password generator like this one to create your passwords automatically. Repeat the process whenever you see fit (such as after every 30 days).
The cryptocurrency ecosystem is still quite new compare to other markets. But it’s growing quickly explains Brian Colombana. Because of this, there are sure to be bumps in the road along the way. However, as more people begin viewing virtual currencies as a legitimate alternative to fiat money. That can’t be tamper with by banks or governments, these bumps will become smaller and farther apart. This means that if you take the proper precautions. Now—you won’t have to worry about losing your hard-earned funds later on down the line!