If you’ve already invested your hard-earned money in the cryptocurrency market, the last thing you’d want to happen is to lose your virtual coins. It doesn’t matter how many coins you have; what matters is keeping them secure, so you don’t have to worry about stolen, lost, or scammed coins because of a mistake you could have easily avoided. This guide should help you get started on how to keep your digital assets secure for good.
Why you shouldn’t keep coins in an exchange
Many people make the mistake of keeping many digital coins in their preferred cryptocurrency exchange. This is never a good idea, especially if you’re not actively trading the coins. Regardless of how big or popular the exchange is, the risk of hacking can’t be avoided. Several exchanges have already been hacked, causing their users millions of dollars’ worth of digital tokens.
A good rule of thumb is to only keep the coins you’re actively trading in an exchange. Users of Bitcoin Code, a CFD cryptocurrency trading system, also recommends moving profits away from the exchange and into an offline wallet. This reduces the temptation of trading more coins instead of just keeping them over the long-term. Setting up an offline paper wallet or investing in hardware wallet proves much safer for keeping your coins.
Protect your recovery seed
When you set up a wallet, you will be provided with a unique recovery seed. This contains 12 to 24 randomized words which you can use to recover your wallet in case it gets lost or stolen. As soon as you receive the recovery seed, be sure to write it down on a piece of paper immediately.
Remember that the recovery seed plays a big role in securing your digital assets. You shouldn’t take shortcuts when it comes to protecting it. Never post it online or keep copies on any of your devices. You wouldn’t want hackers to find your recovery feed after your phone gets hacked. Also, don’t store it on any mobile app or cloud storage platforms.
The good old pen and paper are your best friends for protecting your recovery seed. And once your portfolio becomes substantial, it’s time to invest in a hardware wallet. This is like online wallets, but you don’t need an internet connection to access it. It’s a special device that holds the keys to your wallets without the risk of exposing the keys to your local computer. This means even if your machine gets hacked, your keys will remain safe.
Some people go the extra mile and add a recovery phrase to their unique seed. Others even memorize their recovery seed, so they wouldn’t lose access to their digital assets in case a natural disaster destroys the paper in which their seed is written. It’s up to you whether you’re willing to do the same. But at the very least, avoid keeping your digital coins in an exchange or online wallets and move them to a hardware wallet for good.