Like the title suggests, I would like to know how do you ensure the security of your cryptocurrency holdings? I am trying to get into cryptocurrency and I would like to know your opinions about this topic. Any input will be appreciated. Thank you!
The safest way there is is to store them in a cold wallet. That means that the coins, instead of being in a virtual wallet, are stored on a physical device (similar to a USB flashdrive). This way you can be 100% sure that your coins are offline and that only you can physically put them back online if you need to.
@abelbm Ohh, I never thought that there is a physical device where you can store your Bitcoin. I thought you can only store them through digital wallet or banks. So Bitcoins have actual 'files' you can store in a physical device?
I can't give you an answer at a software developer level, but yes, cryptocurrencies can be stored on physical devices. Now, it's not that there are files that are stored there, but that the physical device is designed exclusively to run a wallet software in which the ownership of the coins is stored.
Maybe I didn't explain myself as clearly as I'd like, but it's a complex topic. 😅
You'll need a hardware wallet and software wallet. The hardware wallet is the most secure as you'll have a physical offline storage for your cryptocurrency
Physical devices are a good way to go as the others have said. At least you know that you are the only one who has access and control over them. That way you won't risk losing security over it if anything does ever happen.ย
@abelbm Wouldn't that also pose a security risk if the device if someone else where to get hold of it or how does it work?;
@abelbm I see, the physical device acts like a 'safeguard' for your crypto and the software acts like the actual 'wallet' ? I am not sure if I explained it in a way that it makes sense. 😀
Store in a hard wallet and ensure high encryption standardsย
@abelbm Wouldn't that also pose a security risk if the device if someone else where to get hold of it or how does it work?;
Yes, The fact that it is physical implies inherent risks such as theft, loss, damage, etc. Now, it also implies that it presumably has specific features like extra security layers like passwords, 2AF and so on that only allow the person who knows them to use what is stored on the wallet (unlike a regular wallet, where you can simply open it and take the bills inside).
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@abelbm I see, the physical device acts like a 'safeguard' for your crypto and the software acts like the actual 'wallet' ? I am not sure if I explained it in a way that it makes sense. 😀
Yeah, something like that. The hardware acts like a fairly easy way of completely isolate the wallet from the internet, adding an additional layer of protection while the software in it continues being perfectly functional once it gets back online.
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Go for a cold wallet, like a Ledger or Trezor- those bad boys keep your coins offline and out of hackers and never store your keys or passwords on cloud services
Cold wallets have been always the safest. And manually writing the passphrase and storing them in a physical storage like a book or something.
Many great points here, especially regarding cold wallets like Trezor or Ledger even manually writing down the passphrase. For anyone who is new to this thing , it is actually very very important that you keep your passphrase stored somewhere safe in a secure position. Loosing it means loosing all of your crypto forever.