Opinion

Fear The Reaper – Don’t Leave Funds On Crypto-Exchanges

If you’ve been around the world of digital currencies for a few years, you may have heard of someone saying that they got “goxx’ed” at some point or another. While this saying may sound relatively benign, it’s no doubt a nightmare for those involved to recall seeing their digital currencies disappear overnight and have no recourse to get them back. It’s become a fact of life that exchanges, at some point or another, get hacked and that leaving your funds in a trading wallet, in any amount is asking for trouble. Even the best ones out there that brag that they’re virtually un-hackable, get hacked. Take for example, Gatecoin’s latest security breach and Shapeshift’s hotwallet heist.

I know all of this first hand as my funds were tied up in a recent crypto-exchange theft and, while I eventually got all of my assets returned from the exchange, I realized during the whole ordeal that I could have avoided such trouble all together if I had just take the advice I’d seen posted time and time again on places like Reddit.

After you exchange your funds, secure them as soon as possible.

Trusting your crypto-funds to an exchange or any wallet provider isn’t a safe, long-term strategy. There are plenty of bad-guys and gals out there innovating in every possible way to access funds of others and steal them. While living under a cloud of fear as a crypto-currency holder exactly a good way to live, considering prudent levels of security for your assets will at the very least pay dividends down the road.

Unfortunately for cryptocurrency enthusiasts, there are many stages that almost everyone goes through before they are comfortable with handling any one digital currency. By the time they get to this point of feeling comfort, they still might not be using it safely. Ignorance may be bliss for some users, as the illusion of safety and security is provided by lots of different exchanges, web and mobile wallets, but there are certainly plenty of very skilled hackers out there who won’t hesitate to swipe your funds for their own gain if given the chance. While there’s no 100% safe way of owning any form of wealth in this world, there are some basic steps that should be taken by any savvy cryptocurrency holder.

Deep Cold Storage

What’s the most secure form of storage for just about any time of cryptocurrency? Most people would consider that to be an offline, unconnected machine that has no possibility of access from the outside world. While this option, in and of itself isn’t even 100% certain of protecting our digital currencies barring fire, flood or asteroid, it’s certainly an option that those who are serious about keeping their assets safe should consider. Do you have a spare laptop laying around that you can keep away from Ethernet cables and any wifi connections? Try loading your digital currencies onto it and throwing it in a safety deposit box. That’s just about as safe as you can keep your digital currency assets.

Cold Storage and Hardware Wallets

As far as offline storage gos that you can more easily access and connect to, paper backups of private keys, USB drive storage, specialized hardware wallets and actual novelty items like physical Bitcoins are all good options to keep your funds away from hackable servers most of the time.

There are also hardware wallet options where a full on computer isn’t needed to safely store cryptocurrencies. Currently most of these hardware wallets are built to store Bitcoin, however with the rise of Ether’s value, market cap and overall popularity, some hardware wallet providers are releasing upgrades to the code of existing hardware wallet models to support the safe storage of Ether.

Strong Passwords

Passwords are important for anyone involved with important information or data security online. In a realm where cryptographic experts are running the game, using a simple password that includes your birthday or other silly simplistic figures simply won’t hold any water if your account is targeted for a hack. Random password generators are always a good idea if you can’t dream up a super random, odd and varied combination of letters, numbers and symbols that you can remember.

Also, as far as many experts are concerned in cryptocurrency forums, brain wallets are usually a bad idea as well as many have been drained due to their relative simple form of security.

As for trading margins and making money on ETH, BTC or any other combinations of digital currencies, that’s a whole other matter of studying and hoping to have good luck in order to not lose money. Don’t be careless and don’t be a fool – don’t leave your cryptocurrencies unguarded.

Un-Sponsored Resources (I don’t get any kickback or payment for these)
Ledger Wallet – I use the Nano. It’s pretty easy to use and setup. It’s a little buggy on my Linux machine, but works like a dream with my Chromebook and every Windows and Mac machine I’ve ever plugged it into.
Trezor Wallet – This is a bit more high tech than Ledger from what I understand. I know some pretty savvy people prefer Trezor and Trezor should support ETH storage soon too.
MyEtherWallet – You can make a paperwallet from this site. Follow the steps carefully when setting up and don’t send too much ETH to your paper wallet until you know exactly how it works and have backed everything up.
Jaxx Wallet – This isn’t as secure as the list resources above, but it’s pretty secure as far as mobile wallets goes and offers multiple backup options that other mobile wallets do not. They also handle Bitcoin, Ether and DAO tokens all in one app. I really like it.

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