The range of digital assets available to the modern investor continues to grow. In addition to cryptocurrencies like Bitcoin and Ether, there are meme coins, NFTs, fan tokens, and more.
While these do not have physical equivalents that need to be stored in vaults or safes, they do need robust security to ensure they stay out of the hands of thieves and hackers. Fortunately, along with the increase in access to these assets, there has also come an increase in security methods and products.
The Need For Security
There are thousands of cryptocurrencies today and a host of new meme coins, including those found on coins.meme. All currencies hold value, and this can be prone to significant increases and decreases. Thanks to their sentiment-based trading signals, Meme coins are especially prone to these price movements, which means that even a once modest investment can become worth a substantial sum. Securing these, as well as NFTs and other digital assets, is an important part of digital asset trading and holding.
Securely Store Your Seed Phrase
Whether you hold Bitcoin, Solana, Floki, or a gallery of NFTs, unless you use a custodial service, you need a wallet to store the keys to those assets. Wallets can take various forms, from ultra-secure hardware wallets to the least secure exchange-based wallets. Most provide you with a seed phrase when you sign up.
This phrase consists of between 12 and 24 random words, and it can be used to regain access to your holding if you lose access to your wallet. The most common cause of a loss of wallet access is due to forgotten passwords. When you receive your seed phrase, write it down and keep it secure. Do not take a screenshot and store it on the same device as your software wallet, and don’t store screenshots of seeds on cell phones.
Never Disclose Your Seed Or Private Key
Digital assets use public and private cryptographic keys to ensure they are secure. While public keys are publicly accessible, private keys are what are stored in wallets. Some people choose to write their private keys down, for reference, too. You should be the only person that has access to these keys.
Never share the keys with others. Some scammers may request the keys, claiming they need them to be able to process payments, but this isn’t true. Similarly, you should never need to share your wallet seed phrase with anybody, so don’t be tempted to hand this information over either.
Use Unique Passwords
Wallets, exchanges, NFT trading platforms, and other accounts associated with the holding and trading of digital assets all require secure passwords. Whenever you set up a new account ensure you use a unique, secure password. It offers the greatest security even if this means having half a dozen different passwords. The most secure passwords are randomly generated and include a combination of uppercase and lowercase letters, numbers, and special characters.
Passwords should be a minimum of 12 characters, but the longer the password, the more secure it is. You can use a password manager to help remember the different passwords you have, but this itself needs to be kept highly secure and you should use all available authentication and security measures included.
Turn On 2 Factor Authentication
2-Factor Authentication means that a wallet or account uses a second method, other than a password, to authenticate your identification. In some cases, this means a pin or code is messaged to a cell phone, but you can also get authenticator apps that can be used. And, if the device you use has biometric authentication capabilities, these can also be used with most digital asset storage solutions.
The more forms of authentication required to get into an account, the more secure it is, so while receiving and using one-time codes might seem inconvenient, it is the best option.
Use Multiple Wallets
It is a good idea to have multiple wallets for your digital assets. You can split holdings according to their type or specific coin or just assign certain amounts to each wallet. Doing this means that if an unauthorized third party does gain access to a wallet, they will only be able to take a portion of your total assets.
It may be necessary to have multiple wallets anyway because certain wallets are only compatible with certain blockchains. A Bitcoin wallet may not be able to access the Ethereum network and, therefore, can’t be used to store any ERC-20 tokens. And, if you invest in NFTs, you will likely need a separate wallet for these.
Use Hardware Wallets
When it comes to choosing wallets, the most secure are hardware wallets. Hardware wallets are small devices that look like flash drives, in most cases, and they contain your private keys. When you want to process a transaction, you create an unsigned transaction by accessing an online computer.
This is transferred to the cold wallet via a direct connection. The transaction is then signed using your private key before the transaction is moved back to the computer where the transaction can be completed. Your private key remains on the hardware wallet, which is never online.
Use Cold Wallets
If you want to use a wallet on your device, use a cold wallet. The wallet itself does not connect to the Internet. It works in the same way as a hardware wallet but sits on a section of your hard drive or an external device and operates in a similar way to a cold wallet, so it never directly connects to the Internet.
However, the software wallet does reside on your computer, which means it isn’t as secure as a separate hardware wallet.
Avoid Leaving Assets On Exchanges
Although it is possible to buy directly from other people or to use decentralized exchanges, the most common way for most people to buy cryptocurrency is through a centralized exchange like Coinbase or Binance. Once an investor purchases cryptocurrency, the exchange stores it in the user’s account.
There are usually no limits on the amount, type, or length of time the assets can be held on the site, but crypto exchanges are prone to hacks and other attacks, which means this is one of the least secure methods of storing crypto. Buy your assets and move them straight to a separate wallet.
Don’t Fall Victim To Scammers
Unfortunately, scams are commonplace in the crypto industry. These can range from fake adverts to phishing attacks, but they all have the same intended purpose – to steal cryptocurrency. Even some experienced investors fall foul of scams, and you must follow best practices.
Don’t trust unsolicited links from people you don’t trust. Don’t click links in emails, and remember, if something seems too good to be true, then it probably is.
Learn About NFTs
NFTs have become a very popular form of digital assets. They are digital files that are minted and stored on blockchains, and they can be transferred or sold in much the same way as cryptocurrencies, except they are usually sold on NFT markets rather than exchanges.
If you’re going to buy and sell NFTs, ensure you have a good working knowledge of what they are, how they work, and how you can trade them in the future. You should also learn the most secure and effective methods of storing these assets to protect your investment.
Always Research Projects
Whether you intend to build an NFT collection or are considering meme coins or token presales to invest in digital assets, you should do research. Learn everything you can about the asset class, in general, before researching the specific asset you are going to put your money in.
When looking at presales, for example, you should read the whitepaper, investigate the team behind the project, and analyze factors like tokenomics. DYOR is an acronym commonly used in crypto investment and it stands for Do Your Own Research.
Double Check Payment Details
When you send crypto payments, whether to friends and family, clients or freelancers, or to the buyer of your assets, you need to double-check the payment details. Specifically, check the wallet address and the amount you are sending.
Blockchain records are immutable, so it cannot be changed once the payment has been sent. Payments can’t even be easily refunded – the recipient needs to actively initiate a payment back to the sender. Use QR codes and payment links, because these can help eliminate human error, but still make sure you double-check the details before confirming the transaction.
Conclusion
Digital assets continue to grab the attention of more and more people. Unfortunately, that means they are also firmly on the radar of hackers and thieves, making security even more important to cryptocurrency investors, NFTs, and other digital assets.
Use secure storage solutions, do not share information with anybody else, and avoid scams by following best cyber security practices, and you should be able to ensure the security of your digital asset portfolio.
Rashan is a seasoned technology journalist and visionary leader serving as the Editor-in-Chief of DevX.com, a leading online publication focused on software development, programming languages, and emerging technologies. With his deep expertise in the tech industry and her passion for empowering developers, Rashan has transformed DevX.com into a vibrant hub of knowledge and innovation. Reach out to Rashan at [email protected]
