- The rapid rise in the price of cryptocurrencies such as Bitcoins has attracted lots of attention – both positive and negative.
- This has also caught the attention of criminals who have hacked several cryptocurrency exchanges. Youbit, a South Korean cryptocurrency exchange was recently hacked for the second time and has had to shut down.
- The absence of a regulator in the cryptocurrency space means that you will most likely not be compensated in the event of theft of your coins.
- Here are a few suggestions on how to keep your cryptocurrencies safe.
- Enable 2FA or AUTHY on your phone
Two Factor Authentication (2FA) is a Google app which generates sets of numbers randomly on your mobile phone. Without those numbers, you will be unable to login into the exchange you have your coins on. It is important that you keep your device safe and have back up codes.
- Store your coins in an offline wallet
For investors holding a large amount of cryptocurrencies, it is best you keep them offline. There are different kinds of offline wallets. You can either keep them in a hard wallet or soft wallet. A hard wallet is a physical device in which your cryptocurrencies can be stored.
A paper wallet is a piece of paper with your private and public keys which are generated online. A public key is a set of characters that can be used to send money to you. A private key is a secret set of numbers that allows cryptocurrencies to be spent. Under no circumstances, should anyone know your private key. Please keep the piece of paper in a safe place.
One can also get a desktop/mobile wallet. Coins in a desktop wallet can only be accessed from that device. A mobile wallet is an app that can be downloaded on a phone or tablet to hold all your coins.
- Use different passwords
Rather than use one password for all your cryptocurrency exchanges, it is advisable that you have a unique password for each one. A good password should be a combination of upper case, lower case, alphanumeric symbols and special characters.
- Avoid using public systems
When accessing a cryptocurrency exchange, avoid using public computers or Wi-Fi networks. If you must do so, make sure you log out and wipe the browser history clean.
Do not keep all your coins in one exchange or one place at a time. Have some online in a hot wallet and the rest offline. Where possible, spread them across different exchanges.
The security of cryptocurrency is an on-going concern so it is important that you update yourself on new ways to keep your investment safe.