How to protect your cryptocurrency wallet?

One of the arguments used to refute cryptocurrencies, besides their volatility, is the risk of fraud or hacking. How to protect your cryptocurrency wallet is a somewhat complex dilemma for those new to the world of crypto assets. But, the first thing you need to know is that security threats to digital currencies are not closely associated with blockchain technology. They are linked to third-party interfaces that authorize access to your network. That is, devices on which wallets and private keys are stored or on websites where cryptocurrencies are purchased.

It should be remembered that crypto-assets are not regulated by governments or central banks. Therefore, it is our responsibility to take the necessary steps to safeguard our funds. In addition, in the event of loss of funds, the probability of being able to recovering them is minimal.

Thinking about how to protect your cryptocurrency wallet is not something that responds to whims, paranoid imagery or anything like that. Rather, it represents action aligned with the need to care for and protect our assets from hackers or malicious people. In this article we will see how to protect your wallet against hackers. But before that here is how to keep your cryptocurrencies.

Let's go

How to store cryptocurrencies?

A virtual wallet is the tool that gives us access to cryptocurrencies. Unlike the traditional wallet we carry in our pants pocket; a wallet does not physically contain our crypto assets, rather they reside on the blockchain or in the blockchain.

Comment se passe le processus? The digital wallet saves the private key, public key, public address, transaction history and balance of the cryptocurrencies we have. However, the backbone of the entire crypto-asset custody system is the private key. This key generates the public key which, in turn, produces a public address.

The public address: As its name suggests, it can be shared with all users. So, if a friend wishes to send us bitcoins, we share with them the public address of our wallet which works like a bank code.

The private key: It must be kept with care. And it is that only with it transactions can be authorized from our wallet to that of another person and provide cryptographic proof of the origin of their bitcoins.

So how can you protect yourself?

Considering the above, we can outline some steps to take to strengthen your security when paying with this currency, knowing that you must protect both your identity and your wallets from possible digital theft.

Protect your identity

It is important that you exercise caution when sharing your transaction data in public spaces such as the web. This allows you to avoid revealing your identity as well as your cryptocurrency address.

Use an “escrow service”

When you need to make a buy/sell and you're not sure who's on the other side, you can use an "escrow service". In these cases, the person who needs to make the payment sends their cryptocurrency to the escrow service, expecting to receive the item they requested.

Up to this point, the seller knows his money is safe with the custodian and sends the agreed item. When the buyer receives the goods, he notifies the custodian of the situation so that he can finalize the purchase.

Encrypt your wallet

Wallet encryption is crucial, especially when stored online. As one might assume, the use of a strong password is indiscriminately mandatory. For this purpose we can use tools such as DESlock+ to encrypt files containing sensitive information.

Even better if it is possible to encrypt the entire system drive or user space where these files are located.

Don't forget double authentication

While using online storage services, it is necessary to perform a thorough screening process to discriminate those who are truly reliable. And even then, you have to think that any vendor can be subject to finding vulnerabilities in their systems.

Therefore, it is recommended to use double authentication and, if possible, online services that support the use of hardware wallets.

Avoid using wallets on mobile devices

Especially when dealing with large sums of money, you should avoid using mobile devices as these can be lost and/or compromised. Also, in these cases, it is better to keep the wallet on computers without any kind of internet connection.

Consider using multi-signature addresses

For business transactions or transactions requiring a high degree of security, use multiple signing addresses. This involves the use of multiple keys, usually stored on remote computers in the possession of authorized personnel.

In this way, an attacker will have to compromise all the computers on which the keys are located. This will make his task more difficult.

Update systems, always

Of course, no application is free from flaws, and therefore it is necessary to update both Bitcoin clients and the operating system and other products that run on it.

Software wallets can be affected by any type of malware hosted on the computer, and therefore it is advisable to have a properly updated security solution, to generate massive scans regularly.

Delete a virtual wallet when you no longer use it

Finally, deleting a virtual wallet when it is no longer useful requires a careful process to verify that it has indeed been completely destroyed. On Linux systems, you can use the shred command for this purpose, to overwrite the wallet file with random data before deleting it.

It is necessary to take the trouble to locate any possible copy that could have been created, by the action of the user or the system, and to carry out this same process.