Your assets might have gone up, down sideways for a long time or all over the place compared to their fiat valuations and that might make you nervous, relaxed freaked out or scared.
Now while people have gotten anxiety attacks over valuations, what’s worse than buying something that’s crashing in price... is losing it entirely. Something you bought that devalues might go back up, but cryptocurrencies you lost are gone forever. Malware, hackers and scammers are having a field day with the lack of security people employ to secure their fluctuating cryptocurrencies and tokens.
Be your own bank is not just a slogan, it’s a saying that could also be paraphrased as with power comes responsibility and the responsibility to hold your cryptocurrencies secure lies on you alone.
You don’t have keys, you left your money with in the case of Mtgox a japanese trading card exchange’s basement that pivoted to trading cryptocurrencies, just so you could escape the death grip of the financial system. While there are better exchanges out there nowadays, they are also becoming bigger targets with currency higher valuations. A state sponsored hacking or infiltration attack on a cryptocurrency exchange might be in our medium term future and while this was fiction a few years ago, is the more likely the more profitable it would become.
Or easier what if a country decides there needs to be a haircut of cryptocurrencies on their exchanges, as they found out that their own fiat currency is not what it has been in the past?
Depends!
Device security is always on a scale. If you’re running a windows 1.01 IBM desktop connected to AOL, 1st that’s amazing, 2nd your keys are long gone.
If you’re on a new updated device where the software you’re using is running in a sandbox so other programs can’t easily access your keys, you’re better off, but still the usual response should be doyoutrustthiscomputer.org -> No. The less people to trust while building your security the better.
If your prepaid credit card number isn’t your screensaver, you also shouldn’t leave a lot of money on any online accessible device.
No, don’t trust yourself! Especially not if you’re thinking of your brain. Brains are another common central points of failure.
Don’t get me wrong your brain might be perfectly fine at the moment (you read a semi-long article, congratulations), but can you trust it with a secure password over a long time? There are many people now trying to remember old passwords by trying expensive brute force programs or even going to actual hypnosis therapists… and they can’t have chosen that password more than 9 years ago. Would be a shame to lose your bank account every 9 years and start your life from 0. Be sure to note down your passwords and wallet seeds and store them at a secure location preferably redundantly split into multiple parts.
A hardware wallet is simple yet smart to have. Basically it just generates the encryption keys and transactions directly on the device and which can’t directly be hacked as the keys never leave the device itself. Even using a hardware wallet on a malicious PC will always give you a final confirmation on your hardware device, to decline any transaction that’s malicious in nature.
There are a few prominent manufacturers in the space.
Ok I’ll likely buy one, anything to look out for?
It’s generally recommended to buy directly from the manufacturer. Packages are usually well sealed but there have been some scam attempts with resold devices that were ‘pre-set up’. Once you have your wallet and are setting it up, know that it’s immensely important how you’ll keep your seed phrase safe for the long term.
Don’t save it online, don’t photograph it, don’t copy it on an online printer, don’t think about it wearing an fmri near these people.
Write it down physically best twice, then split the phrases up and store them at secure locations where also you can’t easily access them all at once quickly. They are only needed if you lose your hardware device or an update goes wrong. Never enter it into any site online, not even your google search bar as the seed is your key to all your current and future wallets created by the device.
A hardware wallet is probably the most secure setup given the effort employed. As the intent of holding tokens and cryptocurrencies is usually to have them over a long period of time, it is highly recommend using them instead of software wallets or exchange accounts.
Wait for part 2 on how to use your hardware wallets on the future conda platform soon.