Why securing your cryptocurrencies ?
By "securing your cryptocurrencies", we mean protecting them from malicious individuals who would try to steal it from you, malware or other attacks. But it also means making sure you don't lose your funds. All good reasons to read this article carefully.
Some basic safety tips
Let's start with a few basic tips before getting to the heart of the matter. Because security requires above all very simple precautions, which we list below:
• Use a unique email address for each exchange on which you open an account. This way you will limit the risk of phishing.
• We also advise you to use a complex and unique password and not to store it on your computer.
• Enable 2FA (dual authentication) via SMS or with Google Authenticator. This step is necessary to strengthen the security of your account login.
• Never communicate your private key (we will come back to this later).
Please note that the majority of cryptocurrencies thefts occur as a result of negligence on the part of the holder of the funds.
The use of a wallet
The advice we have just mentioned is obviously essential but not sufficient to secure your cryptocurrencies. This is why you will have to use a wallet. But as there are several types of wallets, we will present them to you.
How a wallet works
Let's see how a wallet works first. Basically, a wallet is similar to a bank account since it records transactions and has a balance.
In practice, the transactions in a blockchain network are stored in blocks generated at regular intervals. This mechanism is often illustrated by a ledger accessible to all and in which each network transaction is written. By rereading the book from the beginning, one can therefore know the balance of each portfolio. Moreover, when a wallet is used, the cryptocurrency does not leave the blockchain, it is simply assigned to a portfolio referenced in this ledger according to the transactions.
There are different types of portfolios for storing cryptocurrencies. But in all cases, they have at least two elements :
• A public key: it is known by everyone and allows you to receive cryptocurrencies or consult your cryptocurrency balance.
• A private key: only you know it and you must never communicate it. This key is used to authenticate your transactions and to prove that you have the amounts sent.
The different types of wallets
Wallets can be grouped into 3 distinct categories :
• Online Wallet
• Desktop/Mobile Wallet
• Cold Wallet
We present you these different wallets and their characteristics in the rest of this article.
Online Wallet : the easiest to use
Online Wallets are the easiest to use but also the "least reliable" in terms of security. In this case, it is a question of leaving your cryptocurrencies on the exchange platform you used to buy them or on a specialized platform.
This solution is the fastest since it allows you to exchange and access your cryptocurrencies in just a few clicks, without having to transfer your funds beforehand.
However, with an Online Wallet, you are not officially the owner of your cryptocurrencies since the online provider holds the private key. You therefore partly delegate the security of your funds to a third party. Moreover, you are doubly vulnerable with this storage method, since you could see your cryptocurrencies disappear if your account is hacked or the platform is attacked.
Nevertheless, by applying the basic safety rules mentioned at the beginning of the article, you limit the risks. It is also advisable to spread your funds across different platforms, if you opt for this solution.
So the Online Wallet can be used temporarily and if your balance is not very high. But in the long term, we advise you to choose a more secure wallet.
Desktop/Mobile Wallet : the in-between
The Desktop Wallet, consists of storing your private key on one of your devices. You are thus in control of your cryptocurrencies.
But beware, this type of wallet requires extra vigilance. Indeed, in case of an attack on your computer, the security of your private key may be compromised, and consequently the security of your cryptocurrencies as well. A follow-up is also necessary, because it is possible that updates of your wallet may be required - especially in case of a fork.
It is also important to distinguish between the so-called "heavy" wallets, which require downloading the entire blockchain, and the so-called "light" wallets, which only require downloading part of the blockchain. "Heavy" wallets have the advantage of being more secure since they allow you to check the entire blockchain during an operation. On the other hand, they consume a lot of storage space (several GB), unlike "light" wallets, which are more economical and often used on smartphones.
Bitcoin Core, Jaxx ou Exodus are popular on computers. As for smartphones, Samsung Wallet and Mycelium are widely used.
Cold Wallet : the most secure
This is a portfolio which, unlike the other portfolios already mentioned, is not connected to the Internet. And that's the difference, because that's what makes it the most secure, because it can't be hacked.
There are two types of Cold Wallet: Paper Wallet and Hardware Wallet.
For those who want to keep their cryptocurrencies safe without spending a penny, this is the wallet for you. It can be generated offline very easily. All you have to do is keep your public and private key in a safe place.
However, this type of wallet is not infallible. If it is effective for storing and receiving cryptocurrencies without being connected to the Internet, you will have to enter your private key in a so-called "Hot" wallet (Desktop, Mobile or Online) to be able to issue a transaction. This would then negate your security efforts since your private key would now be vulnerable to attacks. To solve this problem, it would be necessary to generate a new Paper Wallet - a tedious task when you know that there is a simpler alternative.
In addition, paper wallets can easily be damaged. If you choose this option, we recommend that you make multiple copies of your keys, or even laminate your Paper Wallets or engrave your keys to avoid losing your cryptocurrencies.
Hardware wallets offer the highest level of security for your cryptocurrencies, which is why they are often referred to as digital safes.
Unlike Paper Wallets, these physical media have the advantage of storing your private key offline without ever making it visible over the network, even when you issue a transaction. To send cryptography, all you have to do is bring your Hardware Wallet, which will prove that you have the necessary funds - it is said to "sign" the transaction.
Moreover, by opting for a Hardware Wallet, you will be able to recover your cryptocurrencies even in case of breakage, loss or theft thanks to a seed phrase that you will be asked to write down and keep in a safe place.
Obviously, you will have to pay a little money to get this support, but it is an investment that will guarantee the security of your cryptocurrencies.
Among the best known Hardware Wallets, you will find those available in our accessories page : Ledger, Coolwallet or Coinplus.
You now have the keys in hand to secure your cryptocurrencies, it's up to you to find the tool that suits you best.