James Howell bought 7500 Bitcoin back in 2009 and stored the private keys on a hard drive. 4 years later, he found two similar hard drives, one that was damaged and one containing the keys. Unfortunately, he threw away the hard drive that contained the keys in it. His total loss was reported to be around $79 million.
You hear these kinds of stories all the time. Cryptocurrency isn’t stored like traditional currencies and has to be treated differently as well. If you’re unfamiliar with them, it’s easy to have misconceptions that can lead to costly errors. However, keeping your coins safe isn’t that complicated, as long as you understand the basics. Here’s how you can keep your cryptocurrency secure.
Understanding Private vs Public Keys
The first thing you have to understand is the key system. You have your public key which is like an address to a mailbox. Then you have your private key which is like the key to your mailbox. With cryptocurrency, no one is supposed to see that private key, just like they couldn’t get a copy of your mailbox key in real life. However, all they need is the public key, or address, to send funds to you. The question is, how do you keep that private key safe?
This is where cryptocurrency wallets come in. You may have heard of them but don’t know what they do. In short, all cryptocurrency wallets do is store a copy of your private key, but they’re also the ones responsible for making sure that no one gets their hands on it.
This is why a wallet can literally be nothing but a piece of paper with your private and public key on it. This is not the safest way to store them, but that can be a backup support in case you lose whichever wallet you were using. You also have hardware wallets that consist of a secure USB key, or software wallets you can use on your devices. You also have cloud wallets that will allow you to save your private key online.
Storing Crypto with Exchanges
Also know that you have the option to keep your private keys on the exchange where you bought your crypto. This is the case with exchanges like Shakepay, for instance. While they can be an option, they’re not the safest one, and you have to find an exchange that will allow you to easily transfer your funds into the wallet of your choice.
Additional Safety Tips
If you want to know the safest way to store crypto, hardware wallets are the way to go. They come preloaded with all sorts of security layers and are heavily encrypted. Plus, they aren’t connected to the internet, which makes it impossible for hackers to access them unless they have physical access to the wallet.
You also have to make sure that you only transact over a safe connection. If you’re using an online wallet, make sure that you use a unique and strong password and two-way authentication. Also know that you can have as many private keys and wallets as you want, so you could have a few to store large amounts and another one for small transactions. At one point, you could consider getting a safe deposit box for hardware wallets as your funds increase.
These are just a few tips that will help you keep your crypto safe. Don’t be the next horror story – make sure that you follow these tips to the letter and move wisely.