Ways Of Securing Cryptocurrency

Securing funds is the utmost priority of an individual, involved in dealing with cryptocurrency, the user could then be assured of making them safe in a manner difficult of being reached even from the well guarded bank vaults. But if they fail then they would be prone to risk by some trying to empty their digital wallet.
Securing digital coins in appropriate way is major step in running cryptocurrency ahead. Not every time, it’s about storing the currencies,as currently most of the crypto holders tend to get into contact with DApps in the Defi world, so one should also have the knowledge of using their coins safely.
In a similar way as one won’t allow any untrustworthy business for handling their money, in the same way one shouldn’t trust their coins with any random DApp. In the same way, it is similar to the exchanges where one trades and purchases crypto as well. Therefore, further you will acknowledge the best techniques of securing your crypto assets safely.

Safer Crypto Purchase

Various places are there for making the purchases of your cryptocurrencies these days. The following are involved in the same as decentralised exchanges (DEX), crypto-ATMs, peer-to-peer options and much more. But each choice don’t always offer the similar amount of security and all of them have their advantages as well as disadvantages. Many of the users are upto using reputed centralised exchanges, thereby providing the best mix of ease of using and providing safety as well.

Choosing A Safe Exchange

The centralised exchange as Binance, enhancing regulation, Anti-Money Laundering (AML) measures and KYC (Know Your Customer) checks giving security. On the other hand, the exchanges in early days of crypto have their issues, exchange operators and government have tend to improvise the situation differently. For using an exchange, one would require transferring their funds in custodial wallet. Providing the exchange responsibility for one’s coins could give some security, depending on one’s outlook. If one is new to cryptocurrency then they might be more aware of using the exchange wallets accordingly. This would leave one safe of locking themselves out of their wallets and thereby losing their crypto ultimately.
Where some of them are of the belief of securing their funds directly as if you are not owning your crypto wallet then someone else could control your crypto. Also if an individual has thought off using peer-to-peer service or a decentralised exchange, then there are less chances of searching for ways to enhance the security or safety issues. With DEX, one must move forward on checking an audit from renowned sources. DEX is also offered by Binance which leverages reputation and security of the company. One thing you have to make sure before using peer-to-peer service is having KYC for both buyers and sellers. Even an escrow service should be given as although the risks are not removed entirely, but a third party holding your funds in escrow would give both buyer and seller much protection from scams.

Methods of Securing Your Account

When an individual is involved in purchasing or trading crypto, then securing their account is their next priority. The only way of avoiding access to your account by people is to follow the following points:

  • Use of strong password, which is being changed regularly: Password must not involve the identifiable personal information as your date of birth, For instance, have assurity of its being long and different to that account, having symbols as well, in addition to lowercase and uppercase letters and numbers.
  • Maintaining a check for phishing attacks and scams through email, private messages and social media. As the fraud people so involved, tend to impersonate exchanges and trusted individuals for trying and stealing away your funds. Also downloading of software shouldn’t be done by you from unknown sources as it might have malware.
  • Two-Factor Authentication being Enabled (2FA): In cases where your password is compromised, there 2FA using your mobile device, YubiKey or authentication app would work as second level of protection. Both password and 2FA method have to be used along when logging in.

Ways Of Storing Crypto Safely

After purchasing or trading with crypto, the very next step is to place it safely somewhere and in case one is not leaving it on exchange for trading later on, then the only option left is a wallet. Wallets tend to differ in ownership of private keys and their connectivity with Internet. The ultimate choice between them is dependant on the level of security one is easy in holding.

About Private Key

Private Key is just as real key which unlocks the cryptocurrency one spends. The very important part of an individual’s overall security is to keep your private key and access for the same safe. Key is just a long number and that long that anyone could hardly guess. In case you flip a coin 256 times and write “1” for heads, “0” for tails, then you are going to get a private key and to this, one of the keys so generated are encoded in hexadecimal (using numbers 0-9 and characters a-f).
The number of possible private keys is very near to the number of atoms in known universe. The crux of this is that it is a vital security principle in cryptocurrencies as Bitcoin and Ethereum. Individual’s coins are just safe cause they are hidden in mind boggling huge range.
In case you receive your funds before then you would be prone to know the public addresses, which are strings of random-looking numbers. These are so obtained with the help of conducting some cryptographic magic on your private key so as to gain a public key, which is thereby hashed for attaining the public address.
So get it straight that as it’s easy to generate a public address with private key, doing just the reverse is next to possible today. This is the reason why one could safely list public address on blogs, social media, etc. None could spend the funds sent to it without having the corresponding private key. Where, loosing your private key could end you up in losing access to your funds. In case one has lost their private key then access to their funds is also lost automatically. In case, if anyone else learns your key then they could easily spend those funds. Therefore,it is utmost important for one to keep their private key away from prying eyes.

Seed Phrases

Wallets currently, hold only one private key and are hierarchical deterministic (HD) wallets, thereby having the ability of holding different keys. Therefore one should acknowledge details on seed phrase, which is a collection of human readable words which could be used for generating those keys. So while creating a new wallet, you would be asked to back up a seed phrase, in case you are choosing to use only single private key. The term keys could be effectively used interchangeably for explaining both seeds and private keys, in cases where key storage is used ahead.

Ways Of Securing Seed Phrase

It’s very essential to acknowledge that if 12, 18, or 24 seed phrase is not secure that you are indirectly providing access to phrase for everyone so as to import your keys in their wallet and steal your funds as well. Effectively managing keys is therefore important, by keeping in mind the following:

  • Keeping seed phrase saved on a device which is connected to internet is highly not advised.
  • Storage offline is more safe.
  • In case you choose to store your phrase physically then do consider the material to be used and decide where you want to keep it. Try to store the phrase with your bank, even some of the interested individuals would engrave their seed phrase in metal as it could be destructed easily.

Hot Wallet vs. Cold Wallet

There are two types of wallets, named as hot wallets and cold wallets, having difference of security. Let’s get into the detail of them.

Hot Wallets

Hot wallet could be categorised in any sort of cryptocurrency wallet which connects with Internet (for instance, desktop and smartphone wallets). These wallets give its users, the most seamless experience and are easy going in concern with receiving, sending or trading tokens and cryptocurrency. But such a convenience could be turned in terms of security. Because of the Internet connectivity, these Hot wallets are vulnerable.
But Hot Wallets are not safe and are just not very secure when compared with cold wallets. Hot wallets still are superior in terms of using the same and so preferred when smaller balances have to be hold back.Cold Wallets
For totally eliminating the online attack, most of them opt for keeping their keys offline every time. They also prefer the same with cold wallets as well. As Hot wallets, cold wallets have no connectivity with Internet. Earlier few of the cryptocurrency holders tend to keep a paper wallet, a printed piece of paper holding the wallet’s private key, basically as QR code. But yes, this method is now marked as unsafe safety method and the best way for cold storage is having a Hardware Wallet.

Hardware Wallets

Both the wallets as Trezor One or Ledger Nano S are the Hardware wallets which aim at giving effective user experience by accepting the simple rule of accepting the private key offline. These wallets are much portable, cheap than full PC and also custom made for storing any cryptocurrency. Physical devices tend to save your private keys safely and having no requirement of connecting with the Internet, where a good hardware wallet assures that private keys are never meant to leave the device. Actually these are held in an important place in that device which don’t seem to be recommended for removing.

Comparison Of Custodial Wallet With Non-Custodial

A wallet being custodial or non-custodial means you are having access to and could control your private keys as well. If one is using an online service as cryptocurrency exchange then in terms of protocol level, you aren’t indeed in possession of your coins. Despite the exchange is holding your funds and keys in custody and tend to manage them on someone else’s side (these are termed as custodial wallets). Where, in most of the cases, the exchanges tend to use a combination of both hot and cold wallets for keeping its users, coins safe.
In case one wants to trade BNB for BTC, exchange tends to reduce your BNB balance and enhances your BTC one in its database. But yes, there isn’t any blockchain transaction involved in the same. In case you have decided to withdraw that BTC, then in such a case that exchange sign is requested a transaction on your behalf. Then a transaction would be broadcasted which is going to send your coins to Bitcoin address given by you. 

Comparison Of Custodial Wallet With Non-Custodial

A wallet being custodial or non-custodial means you are having access to and could control your private keys as well. If one is using an online service as cryptocurrency exchange then in terms of protocol level, you aren’t indeed in possession of your coins. Despite the exchange is holding your funds and keys in custody and tend to manage them on someone else’s side (these are termed as custodial wallets). Where, in most of the cases, the exchanges tend to use a combination of both hot and cold wallets for keeping its users, coins safe.
In case one wants to trade BNB for BTC, exchange tends to reduce your BNB balance and enhances your BTC one in its database. But yes, there isn’t any blockchain transaction involved in the same. In case you have decided to withdraw that BTC, then in such a case that exchange sign is requested a transaction on your behalf. Then a transaction would be broadcasted which is going to send your coins to Bitcoin address given by you.
The crypto exchanges tend to provide an enhanced and easy experience for its users who are not concerned with the third party custody of their funds. Further you are at risk if you are having your own bank that non of the individuals could come for rescuing if anything is wrong. Also if your private key is lost then you are not going to recover your funds cause of the same.

Choosing The Most Secure Storage Option

In case you are running an institution which handles huge amounts then you are going to require multiple-signature setup, where various users ought to agree before the funds could be transferred. Say, for users who are regular, it’s best to keep the funds in cold storage, which aren’t used at all. The Hardware wallets are the straightforward options, but one has to assure to test them with less amount for being easy. You are going to keep your keys up anywhere else, if your device is lost itself. Where the online wallets are are good for small amounts being used for purchasing goods and services. In addition to this, if your cold storage is as a savings account and mobile wallet is as physical wallet which you hold on. Preferably it should be that amount, which if not lost then it won’t end you up with serious financial problems.
Therefore, for staking, lending and trading, custodial solutions could be at your best. You should just keep in mind that digital currency is highly volatile in nature, so one should not end up investing ahead of affording the same.

Use of Decentralised Finance And DApps In A Safe Way

In case you want to stake your tokens then you should use them in blockchain games or even participate in decentralised finance (DeFi), you are going to require interacting with DApps permission for using funds in their wallets. For instance, providing the PancakeSwap permission would allow for automating transactions as adding up various tokens to liquidity pool. Where DApp could accomplish various steps all in one single go, thereby saving your time. But it is having certain risks associated with it as well, so be cautious.
Where a compromised project is going to ask for permission for moving unlimited tokens, also less experienced users are going to accept the same and thereby become victims of fraud. Even if the funds are being removed from the DeFi base, the project might have some control and could steal them as well. Even the Hackers are going to manipulate and abuse smart contracts. Therefore, if permission is given to a project then you could be prone to risk in this case.

Revoking Wallet Permissions

A regular check should be made on the permissions given in your wallet and in case you are ought to use Binance Smart Chain(BSC), then BscScan has to take the approval checker tool which is going to allow you to inspect and remove any sort of permissions.

Ways Of Avoiding Scams

Cryptocurrencies tend to attract most of the scammers, where people search for exploiting other users and take their crypto and if the funds are stolen then there is no way out of getting them back. One should always be aware and should send money only to those users, whom they know. Even the identity should always be checked cautiously, to whom you are sending money. The common scams which are most often seen are:
• Phishing: One could receive an email from an exchange or other service which one uses, which is asking you to log in or give personal information. But this might be the scammer who is searching for stealing your information.

  • Blackmail: A scammer might send you malware which keeps your files for ransom. For paying, you would have to send Bitcoin or any other currency for having them back.
  • Fake Exchanges: Very often the mobile apps or websites tend to copy the look of an exchange and as soon as you enter the details, a scammer is going to access your real account.
  • Impersonation: Few of the people might pretend as an official, person of trust or friend. Then crypto or information could be taken out from you, which you would otherwise not provide. In such a case, try to cross-check the ones who say that they are.
  • Pyramid and Ponzi SchemesYou might be offered to take part in new project and purchase its coins or even enter a special deal, which requires to make crypto payment.

Crux

In case you require that your cryptocurrencies should be safe then in such a case the blockchain industry tend to give various security measures. From trading to storing and making use of your crypto, certain tips are effective in keeping funds safe. So, be assured before investing your money in any crypto.

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