Unlike traditional banking systems, cryptocurrency operates on decentralized networks and relies on individuals for security.
Poor crypto storage practices can lead to devastating consequences—once your asset is lost, it cannot be recovered. Unlike credit card fraud or bank account hacking, where government agencies and institutions offer some form of help, there is no "central authority" to help recover stolen funds.
To summarize this article, you must get a hardware wallet, preferably a Tangem Wallet, to store your cryptocurrency safely. Here's why you should do that.
Risks of storing crypto improperly
Cryptocurrency theft occurs when bad actors gain access to your private keys and transfer your funds to their accounts. This happens through hacking, phishing, or social engineering attacks.
Loss of cryptocurrency can happen in various ways, but primarily due to human error or mishandling of private keys. Without backups or proper recovery methods in place, it is almost impossible to retrieve lost assets.
Hacking is one of the most prevalent threats to cryptocurrency security. Cybercriminals continually target cryptocurrency exchanges, wallets, and individual users through phishing scams, malware, or direct hacks into hot wallets.
What is the safest way to store your crypto and keep easy access to it?
The safest way is to get a hardware wallet that simplifies storing cryptocurrency while managing it simultaneously. Hardware wallets keep your private keys offline at all times, protecting your crypto from online threats. Here are the steps you must follow to set it up.
Steps to storing crypto in cold storage
- Buy a cold storage device. Choose a portable device that lets you manage your crypto anywhere and anytime.
- Install and set up the relevant software on your computer or smartphone. Most hardware storage devices require connecting to a software counterpart—a web, mobile, or desktop app.
- Please keep your recovery (seed) phrase secure. Write it down and keep it safe from danger and prying eyes.
- Generate a wallet address. Use this address to receive cryptocurrency in your cold wallet.
- Transfer your cryptocurrency to the designated address on your cold storage device. Double-check that you are sending it to the correct address and network! Sending it to an incorrect one could lead to irreversible loss.
Best practices for storing cryptocurrency
- Use reputable crypto wallets
Choosing a reputable crypto wallet goes a long way in your success as an investor. Crypto wallets are the gateway to your digital assets, and selecting the wrong one can expose you to theft or loss.
Choosing audited and verified hardware wallet providers helps minimize these risks.
- Research reviews and updates
Before choosing a wallet, check out user reviews and expert opinions. Stay informed about any past security breaches or vulnerabilities that might have affected the wallet provider.
- Enable Two-Factor Authentication (2FA)
Two-factor authentication (2FA) adds an extra layer of protection when using cryptocurrency wallets or exchanges. For hot wallets (wallets connected to the internet), 2FA is essential.
We recommend using an app-based 2FA (e.g., Google Authenticator, Authy) which generates a time-sensitive code on your device. It is more secure because it’s not susceptible to SIM swapping.
- Regularly update the software
Software updates often contain security patches, bug fixes, and new features designed to improve overall security. Make sure to update your crypto wallet app regularly.
- Split storage across multiple wallets
Diversifying your cryptocurrency across multiple wallets is a sensible strategy for minimizing risk. You can also keep different types of assets in separate wallets to avoid having everything in a single location.
- Protecting Private Keys and Seed Phrases
To make sure you don’t lose access to your cryptocurrency, it's important to have backups of your private keys and seed phrases (the special codes used to recover your wallet). Keep these backups in secure places like a fireproof safe or a secure location that only you can access. You can also store them in multiple locations to reduce the risk of losing everything if something happens to one backup.
- Never share or store keys online
Your private keys and seed phrases are like the password to your cryptocurrency. If someone else gets access to them, they can steal your funds. Never store your keys in cloud storage or online, as these can be leaked.
- Stay clear of phishing scams and fake wallets
Phishing scams happen when scammers trick you into giving them your private keys or wallet information. They might pretend to be a trusted service or ask you to click on a fake link.
Always double-check website URLs and avoid clicking on suspicious links. Only download wallets from trusted sources and verify the wallet provider’s official website.
- Avoid scam airdrop tokens
Sometimes, fraudulent tokens are sent to your wallet to trick you into interacting with malicious smart contracts or phishing sites. When you try to sell or move these tokens, they may grant scammers access to your wallet.
Avoid engaging with unknown tokens in your wallet and never click on links associated with them.
- Dispose of old smartphones and computers thoroughly
If you’re getting rid of an old phone, computer, or storage device, ensure it’s completely wiped before disposal. Use software to erase your data fully, especially if it contains private keys or seed phrases.
FAQ: How to store cryptocurrency safely
We answer popular questions about storing cryptocurrencies here.
How to store cryptocurrency offline?
To store cryptocurrency offline, you can use a cold storage wallet. This wallet is not connected to the internet during transaction signing, making it less vulnerable to hacking. Popular cold storage options include hardware wallets (e.g., Tangem). These wallets secure your cryptocurrency by isolating your private keys from online threats.
Best way to store crypto long-term?
The best way to store crypto in the long term is by using cold storage. They keep your private keys and recovery seed offline, protecting your assets from online risks like hacking. For extra security, you can store backups in fireproof safes or use multiple wallets to diversify your risk.
How can crypto be stored in cold storage?
To store crypto in cold storage, purchase, set up, and transfer your funds to a hardware wallet.
What is a cold storage wallet?
A cold storage wallet is a cryptocurrency wallet that is not connected to the internet. It signs transactions offline via NFC, Bluetooth, USB cables, etc.
Is it better to keep crypto in a wallet or exchange?
Keeping your crypto in a wallet, especially a cold or hardware wallet, is generally safer. While exchanges offer convenience for trading, they are online platforms that can be vulnerable to hacking and are out of your control.
How long can I keep Bitcoin in my wallet?
You can keep Bitcoin in your wallet as long as you want. There is no expiration date or time limit. Regularly updating your security practices is also important to protect your Bitcoin.
Is Bitcoin safe from hackers?
Bitcoin is secure due to its underlying blockchain technology, which is highly resistant to hacking. However, the safety of your Bitcoin depends on how you store it. Keep it in a cold wallet, and you'll be fine.
Where is the least safe place to keep your cryptocurrency?
The least safe places to keep your cryptocurrency are on centralized exchanges or in hot wallets that hackers are constantly probing. A simple DDoS attack can shut them down temporarily and deny you access to your crypto at important times. Always go with cold storage for long-term storage and security.