7 Ways Not to Lose your Cryptocurrencies
Cryptocurrencies, decentralization and blockchain might be the latest buzzwords but the fact that they are part of a technological revolution that some people still struggle to understand, does not mean they are totally invulnerable. Cryptocurrencies, like any of the rest of your hard-earned money, can be lost in a matter of seconds, just as fiat can be stolen from your wallet. Ethereum, Ripple or PumaPay (PMA) tokens might be a digital, immaterial asset, but it is still your funds which you have gained investing valuable time. Make sure not to lose it in a matter of seconds. Below are important steps you need to take so that your cryptos are safe.
1. Rule number one: Understand cryptocurrencies
Ok, this might sound an easy one, but it takes a bit more than just being young, cool, and eager to get your hands on the latest cryptos. We all admittedly agree that cryptocurrencies offer a breath of fresh air in the context of greedy banks acting as middle men and trying to rip us off. After the financial crisis and haircuts, people are very suspicious of centralized authorities such as banks. But the freedom that cryptocurrencies provide us comes at a cost. With cryptos, there are no intermediaries to take responsibility, no one to inquire about your funds or your lost passwords. Once a transaction has taken place, that’s it. It is irreversible and final. Knowing this and the accompanying risks about security, will help protect yourself from cyberthieves. As Jonathan Levin, co-founder of Chainalysis, an intelligence software firm specializing in preventing cryptocurrency crimes, says, “Computer hacks, phishing attacks and cryptocurrency Ponzi schemes are all common types of cryptocurrency theft.” They are not then the exception, but a common occurrence, so knowing what you are up against will definitely save you the stress and potentially money.
2. Always protect your data
Since viruses are everywhere, and knowing that things can break, no matter what they are made of, means that you are prepared when it comes to securing your private information, passwords, seed phrases and funds. The wisest thing is to store valuable information on secure cryptocurrency wallets, hard drives, USB sticks, or online backup.
If you are a crypto-trader, then you need a high-quality security antivirus software to secure your online transactions. It is necessary then to buy and install a software tool, perform regular antivirus scans, and use strong passwords.
4. Pick the right wallet
No matter how secure cryptocurrency wallets can be, not all of them are the same. Most importantly, avoid carrying too much crypto on your mobile phone or a wallet you use frequently, but only carry what you can afford to lose in case the inevitable happens. Additionally, for more protection, use Google authenticator, encrypt your wallet, and use a well-recommended wallet. Backing up your wallet and your private keys, should involve using a hard copy such as a memory stick.
5. Two-factor Authentication (2FA)
Trading on the exchanges, you need to have a two-factor authentication. This means you need to install software on your smartphone, like Google Authenticator or Authy. For example, with Google Authenticator, there are two steps of verification using the Time-based One-time Password Algorithm (TOTP) and HMAC-based One-time Password algorithm (HOTP). To log in, authenticator will provide a one-time password (6-8 digits) which users will need to use in addition to their username and password.
6. Test it first
Millions have lost their funds by sending them to the wrong address. Always send a small amount before any transaction, just to be sure, otherwise you cannot retrieve your funds. Blockchain transactions are irreversible.
7. If you are not trading, don’t leave cryptos on the exchanges
If you aren’t actively trading cryptocurrency, then you should remove it from the exchanges which are risky and can be hacked. If they do get hacked and lose your funds it will be difficult to retrieve it as many do not have any insurance. If you secure it offline when you don’t use it, then you know you have control of your funds.
With the possibility of cybersecurity being breached and exchanges or your wallet being hacked, cryptocurrency users need to be vigilant and not blindly trust exchanges without taking any precautions. Taking actions such as those mentioned here, and always thinking before you act should keep your data and funds safe. And remember, always make backups of a backup. There is no such thing as good enough in cyber protection.