Tips For Storing Your Cryptocurrency Private Keys

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Investors who have already invested in the Crypto world are familiar with why using a private wallet is so important. If you are a beginner who is just getting to know the world of crypto, of course you have heard that storing your digital money on an exchange is very dangerous. Surely many of your friends have recommended you to use a private wallet.

However, by using a Private Wallet as well as certain risks such as losing the Private Key or damage to your hardware wallet, here are some tips for storing your private key and your hardware wallet "recovery code".

In comparison Wallet, can be divided into 2 types:

1. Hot Wallet: Hot wallet is a digital wallet where your wallet is connected to the internet. Example: saving a wallet on an exchange or in a file/folder on your own computer.
2. Cold Wallet: In contrast to a hot wallet, a cold wallet is stored offline and usually cannot be accessed via the internet, this wallet is in the form of a USB/Hardware Wallet.

Many people have hot wallets and cold wallets because each is designed for a different purpose.

Why do the majority of people store in cold wallets?

Cold Wallet is definitely safer than Hot wallet because you are safe from cyber attacks (hackers cannot steal digital coins that are not connected to the internet). But why do people still choose to keep their money in Hot Wallet? Because young hot wallets are accessible and provide easy liquidity/trading.

Hot Wallets:

Accounts:

Accounts on digital asset exchange websites such as Binance or Indodax are considered hot wallets because these companies store your digital assets. Your private key/account is on their infrastructure and servers. If Binance and Indodax are hacked, and you have an account registered on their servers, then there is a high risk that you will lose money because Binance/Indodax is keeping your money.

If you are very comfortable with using the wallet of your exchanger, it is recommended to enable your Google 2FA on the site. 2FA can be in the form of SMS, Email or Authentication App, it is recommended to use the Auth App, Email and SMS can be hacked but the Auth App is safer.

Software:

Another form of hot wallet is based on a software application that is downloaded to your computer, such as neonwallet or exodus.io. Wallets like this, your cryptocurrencies are in your own control because they don't store your private key on their server therefore they can't access your wallet. However, this can still be dangerous because hackers can still access your digital money with access to your computer.

Cold Wallets:

There are many types of Cold wallets such as paper wallets, hardware wallets or physical bitcoins. But I will only focus on hardware wallets.

Hardware Wallets:

Hardware wallets are physical devices that are stored offline and can be accessed by connecting them to your computer. This wallet is secure because you are required to confirm each transaction by pressing a button on the device. This function is what makes it hackproof.

This type of digital wallet is generally recommended for storing large sums of money. It's like storing Crypto coins on a hard drive, but they are hardware specifically made to store Cryptocurrencies safely. We can turn on this device to transfer coins, upload data and take it offline for more secure storage. 

Each hardware wallet device is given a "recovery code", this code is very important for you to record and store properly because if your hardware wallet is lost or damaged, then you can get your wallet back.

To date, there are no incidents that can prove the theft/hacking of cryptocurrency from hardware wallets/wallets. Hardware wallets are relatively new, but at least for now they have maintained a good track record.

The following are tips and suggestions for storing your private key and recovery code:

Do not store your Private Key on your computer, it is safer to store your Wallet in paper form or offline notes. It is recommended to store not only 1 copy but at least 2 copies of your private key or your recovery code in two different places. If lost, you can still access your private key or recovery code.

Be careful with your hard drive, if you store a hot wallet in the form of a file/folder then there is always a risk that your hard drive will get a virus or the hard drive will be damaged, even though the hard drive can be repaired, the price is usually expensive, from one million rupiah to eight million depending on your damage and not all damage can be repaired.