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How to Secure Your Cryptocurrency?

BitForex Editor
Nov 16, 2020

Somehow, the word cryptocurrency has become synonymous with security. Indeed, security is very important for money. They say money makes the world go round. And nobody would be happy to see someone cart away their hard-earned money. A cryptocurrency is still your legal tender in a different form however, you can't save it in the regular bank.

The ways of the cryptocurrency are very different from fiat currencies, from being decentralized to not having banks per se among many things. Yet cryptocurrencies might be more secure than you could imagine. But how? With so many platforms like Trust Wallet, MyEtherWallet, and MetaMask, cryptocurrency holders can rest assured that their altcoins are safe.

You'll also get to know all about securing cryptocurrencies, private keys, and their relationship with digital signatures, and cold wallets and hot wallets. Eventually, you'll be able to make a good decision about securing your cryptocurrency after this piece. To secure your cryptocurrency whether it is Bitcoin, Ethereum, or Ripple, the most popular solution is a wallet.

However, these shouldn't be mistaken for exchanges that allow you to buy and sell cryptocurrencies. Meanwhile, Some platforms offer to buy and to sell together with the saving of Cryptos. They include the likes of Luno and Binance. These exchanges that can serve the dual purpose of exchange and wallet are not a bad choice to keep your cryptocurrency.

In the case where you have more than one cryptocurrency, you cannot keep them in the same wallet. You can use the same platform but not the same wallet. Let's take a platform like Luno for instance, on Luno you can save Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ripple.

However, they all won't be in the same wallet. Each cryptocurrency would have its separate wallet with a unique address. If you want to receive any cryptocurrency you can make this address available to the sender. With this, money goes directly into your wallet forsafekeeping.

What is a Private Key?

Now for your wallet to be safe and secure, certain measures have to be put in place. Usually, platforms that offer cryptocurrencies simply make the security general such that whether you're doing transactions or saving your crypto, one or more forms of security covers both activities. This could be a password.

To make the security tighter, some platforms add extra security in the form of 2FA. On the other hand, platforms that are strictly for safekeeping are different, like Trust Wallet and MyEtherWallet. They generate mnemonic phrases or private keys for accessing your wallet which you have to keep safe. You can't share this phrase or key with anyone, else you compromise the security of your crypto.

With these kinds of wallets, you also get wallet addresses that you can still share so that anyone can send you crypto.

Digital Signatures

There's no way to discuss private keys without talking about digital signatures.  When you make use of your private key to sign in to your wallet, it produces a digital signature that verifies your ownership of the wallet you're trying to access.

This digital signature also makes sure that your transactions on the wallet won't be tampered with after they have been signed using your private key. Private keys are typical to cold wallets because digital signatures do not require the internet to work. Wallets are of two types, the cold wallet which we've just mentioned and the hot wallet.

Hot Wallets V.S Cold Wallets

Hot wallets are the ones that are provided online. With these, you have to log onto a platform online one way or the other to access your funds. What makes the hot wallets so-called is the fact that they are connected to the internet. Although cryptocurrencies are generally secure, hot wallets are the most vulnerable type of wallets.

This is major because of the extent of damage that can be done. Things on the internet can easily fall prey to hackers. If that happens, all the funds on the affected platform could be looted. This is because all of your security keys are on the platform’s database.

On the other hand, we have cold wallets. While wallets are hosted online, You can carry your cryptocurrency around in physical wallets. However, You still cannot touch cryptocurrency. This type of wallet is more secure not because you have it with you but because no one can get your private key that accesses the wallet if you don't give it out or aren't being careless with it.

Besides that, cold wallets offer you peace of mind. More so, you don't have to take your cryptocurrency hardware wallets everywhere you go. There are several hardware wallets of good repute like Ledger Nano S and Trezor.

Conclusion

We've discussed the importance of keeping your cryptocurrency and you must know the reason why it is necessary to consider the safety of your cryptocurrency despite the fact the Cryptos are generally quite secure. You don't have to make a fuss about whether a hot wallet uses private keys or not.

Trusting the platform is most important. For instance, Coinbase promises that whatever you keep with them is insured, that statement alone is enough to change a mind that is quite set to do cold wallets. However, cold wallets are more expensive since you have to acquire them. Ye, in choosing cold wallets you need to consider things like size and the learning curve.

About BitForex:

BitForex is an exchange service platform that can be classified as one of the Top 10 cryptocurrency exchange services. It is focused on providing millions of users with a digital currency trading and investment tool that is not only safe but also professional and convenient. BitForex has a high customer-oriented culture and state-of-the-art financial technology.

BitForex is programmed in a way that it can quickly adapt to the changes of the Crypto market while introducing new features like margin trading, enhanced trading charts,  derivatives, and a host of others. The headquarter of BitForex is located in Hong Kong, while there are branch offices in countries like the United States, South Korea, and Singapore.

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