Cryptocurrency wallets – Are they secure?
Cryptocurrency wallets are of varying types and each one provides different methods to access and store your digital currency. Security options for wallets are of varying degrees. Based on the type of wallet one uses and the service provider, the level of security differs. Web servers are riskier environments to maintain your assets compared to offline wallets.
Online wallets may pose digital investors with various potential vulnerabilities which may be exploited by cyber attackers to rob your digital funds. Whereas the Offline wallets are not easily hackable because they are connected to an offline network and do not depend on any third party for their security.
Even though online wallets prove to be more vulnerable and prone to attack by hackers, diligent security measures have to be implemented and practiced while using any cryptocurrency wallet. A point to remember is that no matter whichever wallet you choose, losing your private keys will eventually result in the loose of your digital money. You have to take necessary precautions and continue reading further on how to be careful.
Backing up your wallet
Similar to your everyday pocket wallet, storing a small quantity of cryptocurrency for daily use online in your mobile or system and safekeeping the majority of your funds in a safe and secure environment will be advisable. Backing up on offline storage options like USB or Ledger Nano or paper will help protect against any computer system failures and allows you to retrieve your wallet in case it gets stolen or lost by any chance.
Always keeping your software up to date and installing system updates provides you with the latest security options that are available in the digital market. Regular update is necessary not only for your wallet software but also for the software installed on your mobile or computer system.
Providing extra security layers
Multiple layers of security protection are an added benefit. Setting up complex and long password protections and securing any withdrawal of funds with a password is a must right at the start itself. It’s best to use wallets that hold a good reputation, provide additional security layers such as two-factor authentication and request pin code details each time the wallet software is operated.
One might also consider using cryptocurrency wallets that require multi-signature transactions such as CoPay or Armory. Multi-signature or multi-sig wallets are digital wallets that require the approval of multiple users or another user before any transaction can be successful, thus ensuring the authenticity of the digital transaction made.