The Key Crypto Wallet Safety Practices: How Safe Can Crypto Be?
In this section, we’re going to talk about how safe is cryptocurrency, as well as some of the best crypto wallet safety practices that everyone should be following!
Imagine that you’ve bought the safest wallet on the planet. It has multiple locks attached to it, and even a digital display requiring your fingerprint in order for it to open. You store all of your money within the wallet, and walk around feeling very safe about your cash.
However, one day, while you weren’t looking, someone grabs your wallet from the table where you left it on. Even though it might have been the safest wallet in the world, it still got stolen - in order to avoid something like this happening in the real world, to your crypto assets, you need to be aware of some of the best crypto wallet safety practices!
In this section, we’re going to look at how safe is cryptocurrency, as well as some of the most important crypto wallet safety and security practices that you should be aware of, when you’re just starting out with crypto. I’ll reveal the top tips for keeping your crypto safe, and then elaborate on how you can use them yourself, no matter what type of wallet you might have.
So, let’s get to it!
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Is Your Crypto Safe? (5 Best Crypto Security Practices Explained)
Don’t Tell Anyone About Your Crypto
Now, keep in mind that a lot of the best crypto wallet safety practices covered in this section are going to be applicable to both hot wallets, as well as cold storage devices.
If you have no idea what are hot or cold crypto wallets, please make sure to read the section dedicated to this topic. It’ll help you get a much better understanding of how to keep your wallets safe!
So, now - is it safe to invest in cryptocurrency, and just how safe are cryptocurrencies, in general? Well, the answer really depends on whether or not you follow all of the “best safety practices”!
The first safety practice is rather simple - you should never tell anyone about owning crypto, or about the wallets that you use.
Why is that the case? Let's expand on the earlier example.
Imagine that, with your super-secret wallet in hand, you went to a coffee shop to meet a friend, and ordered a cup of coffee. Excited about your new wallet, you start telling your friend all about how secure it is, and how you now keep all of your money inside of it. A stranger sitting nearby overhears your conversation, and takes an interest in what you’re saying.
The first opportunity they get, when you’re not looking, they grab your wallet, and run off with it. Perhaps if you wouldn’t have boasted about that item, it would still be in your possession, and you wouldn’t need to ask yourself - is crypto safe?
Cryptocurrency wallets work the exact same way, really. With hardware wallets, this is self-explanatory - they are actual physical items that can be stolen. The same, though, is true with hot wallets, as well.
If you go around boasting about your crypto portfolio, telling everyone where you keep all of your assets, you risk becoming a target to some less-than-honorable individuals. The saying “money loves silence” is very accurate, in this regard - you can probably see why that’s the case, as well!
Store Your Recovery Phrase Somewhere Safe
Moving on, note that there’s actually something even more important than your crypto wallet, cryptocurrency storage-wise. Something that is essential to know about, when you’re wondering “how safe is cryptocurrency?”. That would be the wallet recovery phrase.
Whenever you set up a crypto wallet for the first time, you are given a string of randomly generated words – usually 12 or 24. These words, in that exact order, are your wallet recovery phrase. If your wallet got lost, stolen, or if you forgot your password, you would use this phrase to recover your funds to a new wallet.
Now, as you can probably guess, this works the other way around, too. So, if someone were to steal your wallet recovery phrase, they would essentially be able to “recover” (i.e., steal) all of your wallet’s contents. Needless to say, that’s a really scary scenario!
This is why it’s absolutely crucial that you keep your wallet recovery phrase in the safest possible place you can think of. Since it’s something that you’d only need to use in an emergency, you can store it somewhere remote, like a safe. On top of that, NEVER tell anyone where it is - that’s very important!
Avoid Clicking Weird Links on the Internet
The next “best crypto wallet safety practice” is mainly applicable to hot wallet owners. It has to do with all of those weird links that you see in your email, on various websites, or in your chat box. This includes a message that you’ve received from a friend, telling you to "check out this awesome photo on this definitely-not-suspicious website”.
You know the drill by now - links with viruses and keyloggers are something that we’ve all encountered, at least once in our lives. Some of them are very obvious, but others can be super-malicious, as well as difficult to spot.
Well, if you’re not careful, and accidentally download a virus by clicking on one of such links, you might set in motion a sequence of events that’ll lead to your wallet being emptied. It doesn’t necessarily have to be related to questions such as is staking crypto safe, or is accessing a specific dApp secure - these hacks can happen in crypto-unrelated ways, as well!
The best-case scenario is to have a separate device, altogether. You would only use this device to log into your crypto exchange account, trade, and use your wallet to perform transactions - that’s it. Assuming that the device is brand new, and hasn’t been compromised before, this would lower the chance of you catching a virus significantly.
Naturally, not that many people are going to take this route. Instead, if you use but a single device for all of your internet browsing and crypto trading wants and needs, do put in the conscious effort to avoid any suspicious websites and more-than-shady links.
Don’t Carry Your Wallet Around With You
As opposed to all of that, let’s now take a look at a safety practice that’s mostly relevant to cold, or hardware wallet owners - never carry your wallet around with you, if you won’t need it.
Though this is something that you’ve probably figured out already - thieves and malicious individuals are always looking for people who are not careful with their belongings. Cryptocurrency wallet devices are definitely not an exception. Instead, quite the opposite is true, really - they attract attention, due to the fact that they look interesting and futuristic. Even wallets that are designed to look like everyday items are still somewhat unusual - that’s both a good thing, and a bad thing, really!
In other words, your hardware wallet should remain in a safe and secure place, at all times. Usually, there’s absolutely no need to bring it with you to a date, a meetup with friends, or to the local grocery store. Everyone learning about how safe is cryptocurrency should know this very well!
If you do accidentally take your wallet with you and notice only after you leave the house - keep it in your pocket, and don’t tell anyone! Otherwise, you might end up being the main character of the situation I described at the beginning of this section!
Be Careful With Your Transactions
Up to this point, we’ve mostly talked about “external” factors - thieves stealing your wallet, keyloggers & viruses, and so on. However, learning is cryptocurrency safe, you’ll find out that wallet safety practices are applicable to the other side of the deal, as well.
To be a bit more specific, you should always check the transactions that you’re participating in, too. Never interact with strange applications that ask you for your wallet address, and never send your crypto to some shady third parties. With the crypto market evolving so fast, scams evolve, as well, and become more and more intricate and clever. The best way to avoid them is to remove yourself from a fishy situation, altogether.
On the flip side, avoiding these types of situations can sometimes be tricky, I admit. This is where the second part of this crypto wallet safety practice comes in - diversifying your crypto storage options.
Is it safe to buy crypto on Robinhood? Probably, but only if you use an external wallet. Is Gemini crypto safe? Perhaps, but far less safe if you keep your tokens on the exchange! Can I keep crypto on Binance, Kraken, or any other exchange? Well…
If you want to feel a bit more at ease about your portfolio, you should always have multiple wallets at your disposal, with at least one of them being a hardware device (due to their high-end security). This way, even if something were to go wrong, and one of your wallets got compromised, you wouldn’t risk losing ALL of your assets.
Of course, managing multiple wallets can be a daunting task. Nonetheless, it’s certainly a practice that can save your crypto, especially if you have a large portfolio of different coins and tokens!
Wrapping Things Up
Those were some of the best crypto wallet safety practices that every beginner crypto enthusiast should be aware of, and utilize. Of course, there are many more different safety measures that you could take, in order to ensure the security of your crypto. However, if you employ the practices that were discussed in this section, you’ll already be ahead of the curve, by a significant margin!
So, how safe is cryptocurrency, and is it safe to invest in crypto, in the first place? It’s clear that, if you follow all of the proper precautions, crypto can be relatively safe. Though it’s important to always stay up-to-date and aware of what’s happening in the industry!