What is a Crypto Wallet and How to Secure it

May 1, 2024

What is a Crypto Wallet and How to Secure it

What is a Cryptocurrency Wallet?

There are various types of cryptocurrency wallets. The three prominent are offline, online, and those held by a custodian. Before we explain the differences between the three, it's important to note that a custodian, in this context, is an entity that holds your private key. Next, we'll go into what a private key is but first, let's dive deeper into the three types.

Offline Crypto Wallet

These are often wallets created on paper or within a mobile USB/Bluetooth hardware device.

A paper or offline wallet is that in which you've established a new crypto wallet of your choice, be it Bitcoin, Ethereum, Solana, etc., and record the information in an offline, non-digital media, like paper. Paper wallets are the most secure form of holding coins and require careful planning on storing this information.

A mobile USB and Bluetooth device is a hardware device that can store highly sensitive information, like your password seed and private keys, on a device that can be attached to via mobile phones and computers.

Online Cryptocurrency Wallets

An online crypto wallet allows you to download and hold the private key, password seed, and other sensitive information required to withdraw, transfer, and convert the contained coins.

Wallets Held by a Custodian

Typically, custodian wallets are those in Exchanges, like FTX.US, Celsius.network, and Uphold.com. While you own the coins in these wallets, you technically don't, as the custodian retains and keeps the respective private key a secret. However, you are free to withdraw your coins, from these cloud-based wallets, into personal online or offline addresses whenever you want.

How to Keep your Wallet Secure

Whether you use offline, online, or cloud-based wallets, it's vital to understand cybersecurity best practices.

Total Control and Secure System

If you have more than one computer that only you use, choose a system to access your wallet(s) with the minimum apps installed. Maybe a computer with the latest version of Microsoft Office, your favorite web browser, and security software. If you only have access to one computer, enable Hypervisor or download VirtualBox and create a virtual machine that is only used to access your wallet.

Ensure that the operating system (Linux, Mac, or Windows) has the best antiviral protection. We recommend SentinelOne EDR, an enterprise-grade antivirus program that does a lot more than the traditional AV/malware agent. In addition, ensure that your system is behind a hardware firewall and a software firewall for added protection. Investing in a Next-Generation Firewall (NGFW) like Sophos, Cisco, or FortiGate is worth the investment.

Also, be mindful of opening emails and browse the net on the chosen system—the less exposure to the Internet, the better.

Never Access your Wallet on a Public and Untrusted Computer

Doing so jeopardizes your wallet's security integrity. Even if your borrowing a co-worker, family member, or someone's computer you trust, you don't know if that system is compromised with spying malware.

Never Mine Crypto on the Computer

There are a ton of mining software packages you can download. A lot of which have malware that spy on your system, specifically targeting private key strings. If you are going to mine cryptocurrency, do so on a separate computer.

In Conclusion

There are other more advanced ways of mitigating digital threats and would-be thieves from acquiring your crypto fortune. But if you can follow the simple rules mentioned above, it will go a long way in keeping your data and your coins safe from criminals.

We work with companies worldwide to help them identify what security protocols they should use that make sense for their infrastructure and data types. Feel free to reach out to us for consultation should you want Cybersecurity experts to assist with forming your secure environment.

PS. We like to store our highly confidential information in platforms like 1Password.com with very high encryption standards from rest to transmission; even the employees of these password managers can't see your uploaded data and files.

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