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How to secure your cryptocurrency
- There are two main options when it comes to cryptocurrency wallets: hot, or online, wallets and cold, or offline, wallets
- Both types of wallets will provide you with a private key - a seed phrase consisting of 12-24 words - which must be kept secure at all times, preferably on a piece of paper in a safe
- Cold wallets are physical devices on which you store your cryptocurrency and are considered the most secure way to store your crypto
- Hot wallets are free and easy, and as such popular, but more susceptible to hacks and exploits
- Two-factor authentication (2FA) using a third-party application is a must when it comes to keeping your cryptocurrency secure
- Don't forget to choose a strong, unique password for your Yield App account and set up 2FA to keep your account safe
Safety, as we all know, comes first and nowhere is this truer than in the realm of cryptocurrency. This fast-evolving digital economy is ripe for the picking when it comes to hackers and so keeping your digital assets safe should be at the forefront of all users’ minds. Securing your wallet, where you store your cryptocurrency, is the most important step on this journey and the first to take.
As in most areas of life, wallet security comes in varying degrees and exactly how safe you want to be is up to you. There are two main options when it comes to cryptocurrency wallets: hot, or online, wallets and cold, or offline, wallets - the latter is more secure, but for some less convenient. Whichever you choose, though, there are ways to make sure you are keeping your crypto as safe as possible.
Whichever type of cryptocurrency wallet you choose, you will be given a set of private keys, often in the form of seed phrases consisting of 12 to 24 words that are the ultimate key to your wallet. These are different to your password, which is the first layer of security and which you will use to login from trusted devices. In contrast, private keys are the last line of security for your funds: if the device with your wallet is lost or broken, you can use your private key to access your wallet anywhere. By the same stretch, if your private keys are compromised, your crypto’s most likely gone. You alone are responsible for keeping your private keys safe, and only you should ever have them (or a trusted family member in the event of an emergency).
Private keys are typically generated when you open your wallet: they are not stored by the platform or device hosting the wallet, they are on the blockchain itself. When you are given them you must store them in a secure place. If you lose your seed keys, you lose your funds – proven by the infamous case of James Howells who accidentally threw out the hard drive containing the seed-keys to 7,500 Bitcoins when he moved house and is now appealing to local authorities to scour landfill sites. The safest way to store seed keys is offline on a piece of paper that you lock in a safe. You can also store them on an encrypted hard drive, vault or USB drive secured with a strong password of 12 characters minimum.
Considered the most secure way to store your crypto, cold wallets are physical devices on which you store your cryptocurrency, and are typically USB or bluetooth devices. The most popular include Trezor, Ledger NanoS and KeepKey (although it should be noted that Ledger suffered a major hack in 2020 in which customer data was leaked). Cold wallets are the most secure as they are not connected to the internet, and so are not vulnerable to hacks. Cold wallets range in price from around US $60 to $160.
When you set up the device you will be asked to write down your private keys or “recovery seed” which come from an industry-standardized list of 2,042 words. These words can be accepted by any hardware device of the same and sometimes multiple manufacturers which means if you lose or damage your device, you can use the keys to access your funds through a new device. Remember, though: if you lose your keys, there is no recovering your funds so keep them safe, and separate from your device.
Hot wallets are free and easy, and as such popular. Typically you will open a hot wallet with a browser where you will set up a password and be given your all-important private keys, but you can also open hot wallets on a centralized exchange such as Coinbase or Binance. Exchanges often require you to enter “know your customer” (KYC) details and will not issue you a private key, meaning you don’t really have total control over your crypto. The most popular Web3 wallets include Metamask, Trust Wallet and Electrum. Although you can generate new wallets with these Web3 applications, they also allow you to connect your cold wallet to the interface.
These types of wallets are typically easier to manage and interact with than cold wallets, particularly for frequent traders. However, hot wallets are more vulnerable to hacks both at the private and platform level and so users should take particularly good care of their passwords. While it is easier, do not be tempted to store them on a notes application that is linked to a cloud service.
When using a hot wallet especially, two-factor authentication (2FA) using a third-party application is a must. In addition to authenticating your login using an SMS message or email, these applications add an essential layer of security that no crypto owner should be without. An application that you download onto your mobile device, 2FA programs generate a unique number or “token” that you use every time you log in to your online accounts.
Google’s authenticator app is the most popular 2FA application and is free to download. Authy is another to consider, however, and has the added bonus of allowing users to securely backup their 2FA tokens on the cloud. This makes it easier to use the app on different devices and also to restore them onto a new device if your original one is lost or stolen. Remember that, similar to crypto wallets, each 2FA token has a seed phrase that should be below the QR code you scan to add it to your app, and it’s important to securely save them as well.
How to enable 2FA on Yield App
1. Download a 2FA app from your app store, like Google Authenticator or Authy
2. Log into your Yield App account on the web and go to Settings -> Security -> Enable 2FA
3. On the mobile app, you can find Security under the drop-down menu in the top right corner
4. Scan the QR code using your 2FA app and don't forget to save the secret key somewhere safe
5. Enter the 2FA code generated in the 2FA app and you're all set up!
Securing your Yield App account
When using your Yield App account, through which you move money from a wallet onto the Yield App platform to earn a yield on your stablecoins, BTC and ETH, it is absolutely essential that you utilize as many of the security features described above as possible to ensure your security. Customers should ensure that they use a strong, ideally randomly generated password using a password manager like LastPass or 1Password and then use a 2FA application to fully secure their account.
As an entirely online, digital financial marketplace, cryptocurrency is vulnerable to actors with negative intentions. As such, it is imperative that users do everything they can to protect themselves, taking full responsibility for funds they can use as and when they please, but which require more oversight. The freedom and opportunity afforded by cryptocurrency, which is unlike anything available in traditional finance, comes at a cost – and that cost is vigilant personal responsibility.