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HomeMoneyBest Practices for Protecting Your Crypto Wallet

Best Practices for Protecting Your Crypto Wallet

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Cryptocurrencies are an accessible investment and trading option for many people. Interest in cryptocurrencies has increased in recent years as more people trade and invest in cryptocurrencies. This interest has not only attracted the interest of honorable people but also of malicious actors. If you own cryptocurrency, there is the added risk that a malicious actor will try to breach your account. One of the best ways to protect yourself from this is using a crypto wallet.

You should take additional measures to keep your assets safe, even when you use them. Here are some of the best ways to do this:

Use Strong Passwords Everywhere

It might be cliché at this point, but it is vital to mention that basic security starts with a strong password. Your password should contain at least 8 characters, preferably 12, and have a combination of letters, numbers, and special characters.

If you are worried that you will not be able to create a strong password or remember it, you should consider using a password manager. It will create the passwords you need and store them. Ensure you do thorough research to find a secure and reliable one without security issues in the past.

Use a Cold Crypto Wallet

Use a cold crypto wallet

Any wallet connected to the internet is a hot wallet, while one not connected is a cold wallet. Cold wallets provide much better security because they eliminate the threat of data breaches associated with hot wallets and those provided by crypto exchanges.

Regardless of the superior security they provide users, cold wallets come with a significant downside. Losing your wallet means losing your investment because there is no way to access your cryptocurrency or recover it.

For this reason, many people use a cold wallet alongside a hot one. For example, they may have a multi-currency wallet for day-to-day trades and to check how their investments are doing. They then have a cold crypto wallet they use to hold a large amount of cryptocurrency.

Enable 2-factor Authentication and Password Encryption

2-factor authentication provides an additional security layer to your account and any devices you use to access it. At the very least, you should use a one-time password or code-generating software to create codes you enter when you want to sign into your account.

If set up right, malicious actors will never have access to your accounts, and you can, therefore, be sure it is completely safe. However, remember that 2-factor authentication does not protect you if the exchange itself is hacked, which is why it is crucial to choose a secure one that provides insurance in case this happens.

Back-Up Your Seed Phrase

You will receive a seed phrase once you create a new private key or wallet. This seed phrase is crucial for proving ownership and recovering a wallet if you need to. Since self-custodial mobile wallets and services do not store it, you should back it up in a safe place as soon as you create it.

You must secure your crypto wallet, regardless of how much you trade or how much you have in your account. There are numerous ways to do this, depending on the wallet option you use. Start with the basics, like using strong passwords, and add more layers until you get to robust options, like cold wallets.

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