Yes, a hot (online) cryptocurrency wallet is definitely not the safest way to store bitcoin. Even the freshest newb knows that. But let’s face it — you’ll still have to use one to buy and sell BTC and other cryptos.
Today we’ll show you how to protect cryptocurrency wallet online. We’ve gathered below 7 security tips and a few more crypto wallet protection measures as a bonus.
1. Keep Only a Small Sum of Coins in Your Virtual Wallet
Would you carry all your savings in your pocket with you daily? No? Well, if you want a secure bitcoin wallet you should apply the same approach to it.
If you need to have daily crypto transactions keep only as much BTC as needed for those transactions. Don’t actually store all your crypto on an exchange, trade as much as you need and then move the coins of the hot wallet. Where? A hardware wallet is the safest cryptocurrency wallet, so get one and store your crypto savings there.
2. Use 2FA for cryptocurrency security
How to secure bitcoin wallet online? Any wallet is protected with a user password, and some of the hot wallet providers offer two–factor authentication as a security measure. 2FA adds a second confirmation to the common login with a randomly generated time–sensitive one–time password. There are a number of ways to get the one–time password delivered. Some of them are more secure than others.
- Protectimus Slim NFC. This small programmable hardware token is the best online wallet protection you can get. The token has no Internet connection, thus can not be compromised with any malware, and the passcodes it generates can not be intercepted. If you are looking for bitcoin cybersecurity this is it.
- 2FA app. This is a less bulletproof option for bitcoin security with 2FA. A one–time password here is delivered via an app installed on your smartphone, such 2FA password can be intercepted in quite a few ways.
- SMS. Many will confirm that SMS 2FA is not safe for wallet protection. There are too many ways to compromise an SMS–delivered one–time password, from social engineering to malware injection. Yet it is still better than no 2FA at all.
3. Encryption is a basic, yet invaluable measure of online bitcoin wallet protection
Encryption here means adding a password to access your hot wallet. Yet, we are not talking about simple password wallet protection. There has to be a strong password in action here, at least 16 characters long, with everything stuffed in it (upper and lower cases, numbers and special characters).
4. Create Backups Regularly
If your phone is lost, your computer crashes or you can’t access your exchange wallet for any other reason, you basically lose all the coins kept there.
Creating backups every time you have a new transaction might just save your funds one day. Some wallets have keys hidden, so backing up the entirety of the wallet is a good idea. If you had the wallet encrypted create a backup of the encryption key (password) as well. And store the backups in a few secure places, not just one.
5. Keep Your Software Up–to–Date
As with any other software your bitcoin services software needs to be up to date for it to stay safe and hard to hack. It is, however, a good idea to wait for the latest update to be vetted and any possible bugs to be fixed before you actually apply the update.
6. Multi–signature is One of the Best Bitcoin Wallet Safeguards
Multi–signature was created to eliminate as much bitcoin risk as possible with as little effort as possible. To apply this ingenious approach to create the most secure bitcoin wallet you’ll need to have 3-4 other wallets in a group with yours. Each transaction performed with a wallet from the group will need at least 3 signatures to go through, not just the one from the wallet’s owner. This way, even if one of the joined wallets is hacked, stealing the coins will be virtually impossible.
7. Plan for the Future
Yes, generally, giving your keys, and with them, access to your cryptocurrency, to someone else is a security risk. But if you are suddenly incapacitated won’t you want your loved ones to have a way to retrieve your funds?
Keep your keys in a safe place (a safe deposit box for instance) and make sure to inform a member of your family of their location and what to do with them to get the funds in case anything happens to you.
8. A bit more on how to secure your bitcoin wallet
With any transaction that takes place online, there are things you can do to eliminate the most common security risks. So, here are the bonus protection wallet tips we promised you at the beginning:
- Check every email and website URL for the correct spelling.
- Use a browser with no add–ons.
- SSL is a must for every transaction (the URL has to start with HTTPS).
- Never use public Wi–Fi for anything cryptocurrency related.
- Create a separate non–public email for your crypto transactions.
- Double–check the receiving address, whenever you need to spend your coins.
- Change the wallet provider every couple of months.
You can never be too careful when it comes to bitcoin and securing your transactions. We hope the above tips will come in handy and help you stay on the safe side. Need more info on what a cryptocurrency wallet is, how it actually works, how to protect any type of wallet, not only the hot one? Here’s the most comprehensive guide on How to Secure Bitcoin Wallet.
Featured image: Gurock blog