Best Ways To Store And Protect Your Crypto Assets
Best Ways To Store And Protect Your Crypto Assets
"If you don't believe it or don't get it, I don't have the time to try to convince you, sorry."
Satoshi Nakamoto

Crypto—the world under development, questionable in so many ways, except for one— being real. While some are still testing the soil, others are way ahead busy picking the fruits.

The crypto market development is driven by investments, crypto adoption, digitalization in a financial organization, and simplifying processes involved. Future predictions are drafting an expected annual revenue growth rate of 14.36% for the period between 2023—2027.

The cyber world in some sense does not differ much from any other that we know about. It consists of a bright and dark side as an inseparable part. In that sense, growth inevitably feeds its dark side. The scheme, where one uses shortcuts for a benefit at the expense of others, is well known in our society. So, it does not need much to be incorporated and spread like an epidemic.

No spare assets. No spare roles. Crypto assets presenting the value by default fall under the risk of being stolen or lost. Crypto assets presenting the mean of creating a service or product fall at risk of being misused. Scammers have caused a loss of over one billion dollars from 2021 to 2022, mostly through email phishing and investment scams.

While it is impossible to detach strings with cybercrime, efforts can rather be directed toward best practices in managing crypto assets. Among many options, the goal is to choose the most adequate way for storing and protecting them.

What is your crypto asset choice?
Crypto asset choice depends on what you need it for and what you plan to do with it.
Buying crypto assets

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Today we count over ten thousand cryptocurrencies. However, not all are live and in circulation. Very few crypto assets were created to compete with each other, while the majority were created to meet specific needs.

Acceptance range, transaction speed, price fluctuations, blockchain cross—interaction ability, etc., are the points that vary from asset to asset. If you require quick and inexpensive transactions you can buy Dogecoin. Or if your point of interest is established and further growing the community, again this can be your choice. So, defined needs and courses of action should easily take you to the right asset.

Once the asset is selected, the following steps include selecting a reputable exchange platform or broker, funding account, placing an order, and selecting an asset storage method.

Ways To Store And Protect Crypto Assets
The question of the crypto storage and protection selection does not have a simple answer. Primarily, as mentioned earlier, it depends on an asset's purpose. Additionally, it involves multiple precautionary measures every step of the way.

Here we will break down all the important points.

How to store crypto assets

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Crypto assets exist as a piece of data on a blockchain. They can be accessed via a crypto wallet, which is slightly different from the one we use in everyday life.

Crypto wallet does not store funds but represents a tool for interaction with the blockchain networks. What wallet actually stores are private (a password or digital signature that allows you to verify transactions) and public keys (used to generate wallet address).

There are a few wallet classifications. Wallet types based on the form:

  • custodial — the third party has custody over users’ private key
  • non—custodial — user has custody over its private key
Wallet types based on the work:
  • hot — wallet connected to the internet
  • cold — wallet not connected to the internet
Main types of wallet:

Paper wallet

It is a non—custodial cold storage — a physical printout with private and public keys.

Although its characteristics may sound like a safe option, as a way of removing keys from the cryptocurrency network (while tokens remain) and keeping custodial rights, it has its disadvantages.

Physical paper existence and the printout quality are exposed to other risks. This method was practiced before cryptocurrency became popular and technology advanced.

Software wallet

This is the most popular hot storage wallet, which can be custodial and non—custodial. It is available as:

  • online wallet —web-based wallet; it can be custodial or non—custodial in favor of web owners; it is the fastest and most user—friendly way to interact with blockchain technology, but exposed to security risk;
  • mobile wallet —smartphone app, non—custodial, easily accessible, like any other app, falls under app security risk of malware infections and risk of device loss;
  • desktop wallet —computer app, mostly non—custodial, easily accessible, exposed to malware infections, with lack of portability;
Software wallets are only as safe as your device, in cyber and physical senses.

Hardware wallet

This is a hot/cold, custodial type of wallet for generating and storing keys, in a form of a plug—in device similar to a USB. Generally cold, this wallet becomes hot when plugged into the device.

This advanced version of the paper wallet securely keeps a crypto user's private key in offline mode. It provides an easy process of signing and confirming blockchain transactions from anywhere. However, it is not considered convenient for active trading and it can be difficult for beginners.

Additionally, a way to store assets can be with the third party in exchange wallets, as a faster and cheaper solution, but with security risks. Teams and organizations managing shared assets or spread across the world can find answers in multisignature wallets. Some can choose to combine wallets and so on. Selection in this domain further can involve questions such as wallet compatibility with different asset types, wallet interoperability, etc.

Lastly, the general question for all would be—cost. This is often related to security level and extra features. It can range from free crypto wallets for many software-based wallets to a cost of up to a few hundred USD for hardware-based wallets.

When you find the best way to store your assets you need to maintain their protection.

How to protect crypto assets

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Crypto assets development is followed by the development of threats. How crypto assets' vulnerabilities can be protected? It is hardly possible to talk about one solution and absolute warranty. This is a complex safety hygiene matter.

While experts claim that blockchain cannot be hacked, other parts involved in managing crypto assets certainly can. Roughly, threats can come through in two different forms:

  • aiming to acquire access to a target's wallet, or authentication credentials
  • demanding cryptocurrency from a target through impersonation, fraudulent investment propositions, fake business opportunities, or other malicious means.
The current lack of a regulatory framework requires the implementation of all possible safety and security measures. This practice should start with the basics: preventing device breakage and loss, creating backups, involving passwords where applicable, and ensuring up—to—date security protection.

Here are the steps that can lead to the best result:

  • two—factor authentication (2FA) or multifactor authentication (MFA)
  • strong and multiple passwords: the password manager can help to automate the process
  • private key backup with a seed phrase (a series of randomly generated words);
  • reputable exchange service, brokerages, assets, wallets, tools, etc.
  • secure Internet
  • up—to—date with risks

These precautionary measures cannot guarantee a 100% safe environment, as there is no such thing, but they can maximize the chance.

What is the winning combination?
A more diverse and advanced crypto offer requires diverse and advanced solutions for storing and protecting them.

The matter of finding the best storage solution among many can seem like a simple task. Summarizing all points, we are easily drawn to the keywords: cold, non—custodial, multisig, and multiple wallets.

However, is this applicable to your case? We cannot know. So, the final answer is not on us. Finding the best combination for storing crypto assets is tight to your needs, the correspondent type of assets, and their purpose.

Keep in mind that absolute ownership comes hand in hand with absolute responsibility. As there is no single, unique, 100% secure crypto assets protection solution, the owner needs to involve different safety steps in building the wall against crypto—threats.

The hackers aim to either gain access to the wallet and credentials or to provoke a response to fraudulent investment propositions, fake business opportunities, etc. So, choosing reputable means, safeguarding your private key, and staying informed on cyber risk trends can keep the security bar over your assets high.

As the best term is generally speaking a relative term, in the complexity of the crypto world, finding the best choice is more achievable on an individual scale. Hopefully, this article will help narrow down the selection.

About Author
Natasa DragicSass content writer. She is experienced in the hospitality industry, primarily cruise ships. Through the customer experience department, she gained insights into IT and Saas. She merged her passion for writing and her new—found area of interest to build a new career for herself.
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