Over the course of last years, cryptocurrencies are rapidly becoming a part of our daily lives. Whether you are just considering entering the space by buying some crypto or already have one, it’s critically important to ensure you store your assets in a robust and secure way. Bitcoin history is full of incredible stories when people lost millions of dollars when accidentally throwing their hard drive away or simply forgetting their recovery password.

In a world of classic money (or so-called “fiat”), most of us have developed a good set of practices to keep our money safe. This post will help you to to get a basic understanding of how to apply these principles to a brave new cryptocurrencies world.

When we think about protecting our money from being stolen, we typically consider several measures of protection.  

Physical access protection as most of us don’t keep bags full of cash in a closet (unless you are the Barry Seal), we prefer to keep it in a well-secured place like safe or bank deposit box. We know that the more secure the safe is, the more our money is protected from theft.  Electronic access protection is even more critical nowadays as most of the times we keep money in our bank account and access them whenever we need them. Using electronic cards we know that we should never enter the card number and security code to untrusted online systems, never write our PIN on a backside of the card. When working with online banking systems we prove our identity with client number, password, and two-factor authentication code. We also ensure that we connect to the right banking site by checking SSL certificate in a browser and keeping our laptop/tablet/phone secured by anti-malware software.

Cryptocurrencies (like Bitcoin, Litecoin, Monero, etc) are based on a blockchain technology, which is secured by design and cryptographically guarantees that no one can get access to your data (read money) unless they have keys. Think about a blockchain as a most reliable safe that was ever invented by humanity or as an ultimately secured bank account that no other person can steal money from, including people from the bank themselves.

So if blockchain is so secured, is there a weak spot that we should care about and protect? Absolutely and it’s your private key (further referenced as PK [1]) The only way to open your crypto-vault is to use the unique PK that opens this most-protected safe in a world. Think about it as a  key from your safe, PIN from your card, password from your online banking system and think about similar concepts to protect it as you would do for fiat money. Remember, your crypto money is as safe as your Private Key is secured.

Here are basic principles you should follow to keep your crypto secured:

  • Protect your private key from unauthorized access
    • DO NOT share your private key (PK) with anyone
    • DO NOT store the PK on laptop/tablet/phone in a plain text
    • DO carefully choose a crypto wallet that will manage your PKs. Untrusted or compromised software can steal your PKs and your money. For storing a large amount of crypto, consider using hardware wallets like Trezor or Ledger.
  • Make backup copies of your PK
    • If you lose your PK, there is no one and nothing that would help you to get access to your crypto again. Nothing and no one.
    • DO encrypt your electronic backups and ensure your take backup on a system that is not compromised by malware. Regular check your system with antivirus and protect with a firewall.
    • DO make an offline paper copy of your PK recovery seed and keep the copy in a secured place. Bank vault or notary might be a good choice. If you want to ensure your offline backup is virtually indestructible, you might want to get something like Cryptosteel.

Follow these simple guidelines to protect your crypto-assets and enjoy the convenience and freedom this technology gives us.


[1] https://en.bitcoin.it/wiki/Private_key