Securing Your Wallet

Just like in real life, you need to take care of your wallet's security. Blockchain allows you to transfer amounts anywhere very easily and gives you full control over your money. Such great capabilities also come with increased risks. However, cryptocurrencies can provide a very high level of security if used correctly. Always remember that protecting your money is your responsibility.

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Be Cautious with Online Services

You should be wary of any services offering to store your funds online. Many exchanges and online wallets have suffered from security breaches in the past, and such services are still not sufficiently insured and secure to store funds like a bank. Naturally, you can use other types of crypto wallets, or you should choose such services very carefully. Additionally, using two-factor authentication is recommended.

Small Amounts for Pocket Expenses

A crypto wallet is like a regular wallet with money. If you don't constantly carry thousands of dollars in cash, don't store such amounts in a mobile crypto wallet. Generally, it is good practice to keep small amounts on your computer, smartphone, or server for regular expenses and store the rest of your money in another, more secure place.

Back Up Your Wallet

Storing a backup of your wallet in a secure place can protect you from computer failures and many human errors. It also allows you to recover your wallet if your phone or computer is stolen, provided your wallet was encrypted.

Back up the entire wallet. Some wallets contain many hidden private keys. If you only have backups of the private keys for your visible Bitcoin addresses, it may not include everything, and you may not be able to recover most of your funds from the backup.
Encrypt online backups. Any backup that is stored online is highly vulnerable to fraud. Even a computer connected to the internet is vulnerable to viruses. Therefore, you should encrypt all backups that are accessible online.
Use multiple secure locations. A single backup is not very safe. If you have multiple backups, events that prevent you from recovering your wallet will not affect you. You can use different types of media, such as flash drives, paper, and CDs.
Make regular backups. You need to back up your wallet regularly to ensure that all recent Bitcoin address changes and all new Bitcoin addresses you have created are included in your backup. Soon, all applications will start using wallets that only need to be backed up once.

Encrypt Your Wallet

Encrypting your wallet or smartphone allows you to set a password against anyone trying to withdraw funds. This helps protect against thieves, but it cannot protect against keylogging devices or software that monitor all the keystrokes you type.

Never forget your password. You need to ensure that you do not forget your password, or your funds will be irretrievably lost. Bitcoin is not a bank; the chances of recovering a forgotten password are very slim. In fact, you will need to remember the password even if you do not use it for many years. If in doubt, you can keep a paper copy of your password in a secure place, such as a safe.
Use a strong password. Any password that contains only letters or recognizable words may be considered weak and easy to crack. A strong password should contain letters, numbers, punctuation marks, and be at least 16 characters long. The most secure passwords are those generated by special programs designed for this purpose. Secure passwords are usually harder to remember, so you will need to make an effort.

Offline Wallet for Savings

An offline wallet, also known as offline storage or cold storage, provides the highest level of security for savings. This requires storing the wallet in a secure location that is not connected to the internet. If done correctly, this method provides excellent protection against computer vulnerabilities. Using offline storage in combination with backup and encryption is also considered good practice. Here is an overview of some approaches.

Signing transactions on an offline computer. This approach involves having two computers sharing parts of the same wallet. The first one should be disconnected from any network. It solely holds the entire wallet and can authorize transactions. The second computer is connected to the network and only contains a 'watching' wallet that cannot create authorized transactions.
Dedicated hardware wallets. Devices for storing crypto assets offer the best balance between high security and ease of use. There are small devices specifically designed to be crypto wallets and nothing more. No software can be installed on them, making them very secure against computer fraud and online theft. Since they allow backups, you can always recover your funds if you lose your device.

Consider Your Will

Your bitcoins can be lost forever if you have not arranged for backup access for your friends and family. If the location of your wallets or your passwords are unknown to anyone, then in the event of your death, there is no hope that your loved ones will be able to access your funds. Take some time to think about this topic, as it can be very important.