Cryptocurrency refers to different virtual payment methods in a network – including litecoins, bitcoins or even peercoins. They are entirely free of bank charges, transaction fees, or government regulations and so they are unerring to follow. The currency exists, but does not circulate as cash in your pocket, but only as a digital key. They are popularly stored in a crypto wallet.
As cryptocurrencies are virtual, they are vulnerable to theft. It is highly recommended to protect your computer and browse securely. A crypto wallet is a software program which stores public and private keys and interacts with different blockchains to let users send and receive cryptocurrency and manage their balance. If you are planning to use a cryptocurrency, you will need a crypto wallet. We will tell how to protect your crypto wallet in this post.
A lot of people use crypto wallets, but there is a lot of misconception about it, Unlike your conventional wallet, a crypto wallet does not actually store currency. Cryptocurrencies are never stored in a single location. They do not exist in any physical form. What exists are the records of transactions which are stored on the blockchain. When someone sends you bitcoins or any cryptocurrency, they are just redirecting the ownership of the coins to the address of your wallet. In order to spend those coins, the private key in your crypto wallet must match the public address to which the currency is assigned. If private and public keys match, the balance in your crypto waller will increase, and, of course, that of the sender will decrease. There is no exchange of coins. The transaction record on the blockchain and the balance change in your crypto wallet signify the transaction.
After getting the cryptocurrency from relevant websites, you have three ways of storing:
- in an online wallet,
- in a software wallet on your computer or mobile device,
- as an expression in a real wallet.
Work is currently under process on different hardware wallets for the analog world. They are just like the tokens of bank transactions or PayPal, but right now there are only pre-orderable or prototypes.
Also Read: A Beginner’s Guide To Cryptocurrency
Like other digital products, these storage mechanisms are vulnerable to malware and hackers, such as keyloggers. Before cryptocurrencies and other virtual payment methods were introduced, only large corporations and banks had to worry about targetted and sophisticated attacks on their computer systems. Now, users save money on their computers, using Paypal and online banking, and use the credit card for online purchases. Basically, everyone has now become a lucrative target for criminals. On Bitcoin exchanges alone, there have been a dozen major attacks that resulted in a loss of several million dollars.
Cryptocurrencies are not a subordinate of central banks and so they are uninsured. This means the loss of money will be permanent if a private computer is hacked or if a laptop is stolen. To protect your crypto wallet, take the following precautions:
- Protect your computer and mobile devices: You must install antivirus on any Internet-enabled mobile phone and computer. This will help you avoid keyloggers, backdoors, spyware, and other security holes which could give hackers access to money. Apart from that, you should use a safe-search browser- so you do not accidentally go to malicious websites.
- Make your internet connection secure. Activate firewall on your network router or use the VPN function (virtual private network). You must not use cryptocurrencies on public Wi-Fi hotspots. If you are an iPhone user, you can use a personal VPN app like Private Wifi.
- It is a good idea to make regular and preferably encrypted backup copies of data. Go for a backup service which encrypts the data both during transmission and when saving. Web services like Dropbox & Co. have an additional level of security as the two-factor authentication is enabled.
- Protect your real wallet and passwords. Never share your password with anyone. Cryptocurrency paper wallets have your private key, in the form of a QR code usually. This reads standard reader. In case of theft, criminals can pay with your Bitcoins as cash.
If you are planning to invest in a cryptocurrency, make sure you research about it extensively, consult with an expert, and follow the crypto wallet safety guidelines mentioned above. These rules are also recommended for virtual banking transactions.
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