Since cryptocurrency exploits are becoming increasingly common in Q3 2023, there's a fresh demand for safe and reliable ways to manage and store crypto. It all boils down to keeping the crypto wallet's private keys safe but easily accessible to the owner.
Securing your funds against theft, hacking, and human error is not rocket science. Thanks to advancements in hardware wallet technology led by companies like Tangem, private key storage is now as simple as putting on a pair of sneakers. We explain the basics of private key storage and more advanced ways to keep your crypto safe.
A cryptocurrency wallet is an app or device that generates private and public keys and creates blockchain addresses for you to make, sign, and send transactions. Simply put, it is impossible to make crypto transactions without a crypto wallet for secure storage and interaction with a private key.
What are private keys?
A private key is a crucial part of the cryptographic framework that most cryptocurrencies are built upon. It consists of an extended, distinctive alphanumeric code that allows you to access your wallet and manage your funds.
For your convenience, this article also considers a seed phrase — a mnemonic series of words that serve as the wallet's backup — to be a human-readable version of the private key.
Seed phrases, like private keys, are crucial in ensuring that you can recover your wallet and access your funds if you ever lose access to your original wallet or device.
To better understand private keys, let's examine their primary functions and characteristics:
— Creating electronic signatures
Users can generate digital signatures for confirming crypto transactions using private keys. These signatures ensure that only the private key's legitimate owner can approve the movement of funds in and out of the wallet.
— Generating public keys
A private key generates public keys through asymmetric cryptography, specifically using mathematical algorithms like the elliptic curve cryptography (ECC) in many modern blockchain systems.
This asymmetric one-way feature ensures that anyone can interact with public keys without gaining access to the underlying private key used to create them.
Learn more about how a private key generates public keys here.
— Possession and control
A private key gives you ownership and control over the wallet's digital assets; therefore, keeping your private keys private and secure is paramount. If your private key is compromised or exposed to malicious actors, your funds will be stolen. Private keys
Private keys are the key to crypto security, letting users access, manage, and control their coins. Anyone involved in cryptography and Web3 must comprehend private keys' significance and the need to protect them.
How to safely store private keys
Private key storage is essential for cryptocurrency security. Secure them with these tips:
- Use hardware wallets
Consider using a reputable seedless hardware wallet like Tangem Wallet. This physical device stores private keys offline, making it highly secure.
- Consider paper wallets
Generate a key pair and print it on paper. Store this paper in a secure location, preferably in a fireproof and waterproof safe. (not recommended)
- Set up secure backups.
Hide your private key's backup options in separate, secure locations. Consider using bank vaults, safety deposit boxes, or secure home safes.
- Avoid digital storage
Never store private keys on a device connected to the internet. This includes not saving them on your computer, phone, or cloud storage.
- Use strong passwords
Use strong, unique passwords to protect your wallet from brute-force attacks. You should consider enabling biometric authentication, too.
- Do not take screenshots
Your device's photo gallery is not as secure as you think. It has multiple points of failure, and you can lose your device to theft.
- Do not reveal your private key
Do not tell anyone your private key under any circumstance. No legitimate customer support representative will ask for your private key. No one must know your private keys except you.
- Enable 2FA authentication
Enable Two-Factor Authentication (2FA) for your wallet app. 2FA adds an extra layer of security beyond just a username and password. Even if malicious actors obtain your login credentials, they still need the second factor to gain full access.
- Educate yourself
Stay informed about the latest security practices, and be cautious of potential risks of storing private keys.
- Use anti-malware software
Install reliable security software to defend your devices from malware or cryware.
- Avoid public connections
Don't use public Wi-Fi or devices to access your hot wallets.
- Update apps regularly
Update your security software and wallet app. Updates often include security patches that fix vulnerabilities or weaknesses in the app.
Without these updates, your app could be more susceptible to hacking or unauthorized access. Remember to install wallet software from only official, verified sources.
Remember, losing access to your private key means losing your cryptocurrency permanently, so take the necessary precautions to ensure its safety.
Multi-signature wallets
A multi-sig wallet, short for multi-signature wallet, is a type of cryptocurrency wallet that requires more than one signature or approval to authorize a transaction. In other words, it requires multiple private keys to initiate a transfer of funds.
For example, in a 2-of-3 multisig wallet, three private keys are generated, but any two of them are needed to validate a transaction. This can be set up with different combinations (2-of-2, 3-of-4, etc.) depending on the desired level of security and the number of participants.
Multisig wallets are particularly useful for enhancing security and protecting against unauthorized access or potential security breaches. They are commonly used by organizations, businesses, and even individuals who want to ensure that no single person has sole control over their funds.
Enterprise-grade key storage hardware security module (HSM)
A hardware security module (HSM) can offer a reliable and secure solution for key storage for companies or organizations managing significant amounts of digital assets.
An enterprise-grade HSM is a critical component of a comprehensive security strategy, particularly for organizations that rely heavily on cryptography to protect sensitive information and communications.
It provides a secure foundation for cryptographic operations and private key management, ensuring the confidentiality, integrity, and availability of critical data.
Secure your recovery process documentation
You need a properly documented recovery process to guarantee that you or a trusted user like a family member can regain control of your assets in an emergency. This process should include your private keys, backups, and applicable security measures. Keep a physical or encrypted digital copy of the documentation securely. Remember that only trusted people should have access to this sensitive information.
Review and revise your recovery plan
Reviewing and updating your recovery plan regularly is important as your assets grow and security measures evolve. Establish a routine of checking your plan at least once a year or whenever your crypto assets or security measures significantly change. Inform your trusted contacts of any updates or modifications to your recovery process.
Specialized features for managing keys in hardware wallets
Hardware keys (FIDO2) and Trusted Platform Modules (TPMs) are security features designed to enhance the protection of cryptographic keys and other sensitive information.
FIDO2 (Fast Identity Online 2) is a set of open standards developed to improve online authentication security. It introduces hardware-based authentication methods to replace traditional passwords.
FIDO2 also relies on public key cryptography. Instead of passwords, you can employ a physical hardware key (like a smart card) that contains a unique private key. This key is paired with a public key stored on the server. During authentication, the server sends a challenge, which is signed by the private key on the hardware key. The server then verifies this signature using the public key.
FIDO2 is highly secure because it requires a physical device to authenticate transactions, protecting against phishing attacks on malicious websites.
Trusted Platform Modules (TPMs): A TPM is a specialized microchip that stores cryptographic keys and performs encryption operations.
TPMs generate, store, and manage cryptographic keys in a secure environment. They encrypt data, verify the software's integrity, and protect against unauthorized access. TPMs help protect against data theft, man-in-the-middle attacks, and unauthorized access to private keys.
FIDO2 and TPMs are critical components of modern hardware wallets. They provide robust security measures beyond traditional passwords, helping safeguard your funds against various threats.
Conclusion
We've explored various methods, emphasizing the importance of secure storage practices. While paper and hardware wallets offer commendable security, opting for a seedless hardware wallet like Tangem takes your protection to an exceptional level. Its innovative technology ensures that your keys remain offline and unextractable, impervious to potential online threats.
With Tangem, you have a secure vault and a user-friendly solution that gives you quick access to your funds. Prioritize your peace of mind and take a step towards optimum security with Tangem Wallet because there's no compromise when the stakes are your private keys.
FAQs
How can I securely store a private key?
Consider using a cold hardware wallet to store your private key securely. This offline storage option reduces the risk of theft or hacking by keeping your private keys away from the internet. To further improve security, adhere to best practices like creating strong passwords and having backups.
Can private keys be kept in databases without risk?
No. You must never keep private keys in a database because it exposes them to hacking, data breaches, and unauthorized access. Always choose secure offline storage alternatives like encrypted files, hardware, and paper wallets.
Where are private key certificates supposed to be kept?
Keep private key certificates safe from unauthorized access. Choose cold storage alternatives like a hardware or paper crypto wallet for increased security.
How can private keys be safely stored in Linux?
To securely store private keys in Linux, consider using a hardware wallet or encrypted file only you can access. Ensure the encrypted file has a robust and distinct password. Adhere to best practices like routine backups and security tool updates. Avoid public Wi-Fi and devices when managing private keys.