One of the scariest things for new bitcoin users is the fear of losing their money. This is perfectly reasonable. I mean, people are afraid of their regular money getting stolen through things like credit card theft, so it only makes sense to want security for your cryptocurrency as well. While there’s little chance of Bitcoin itself ever being hacked, your personal storage is a whole different story. This begs the question, “Can my crypto be stolen? And if so, how can I prevent it?”
The quick answer to this first question is yes, your cryptocurrency can be stolen. Just like the US dollar, cryptocurrency is something that thieves can and have tried to go after. Let’s look at the two dominant methods of crypto storage: hot storage and cold storage.
Hot storage wallets include online wallets and mobile wallet apps. They are simple information (bitcoin) storage units, protected by a private key. Some of them require two-step authentication, assuring that the only person getting into your wallet is someone who knows the specific information you picked for your authentication, or has access to your phone. Of course, this means if anyone gets access to your information or your private key, they also have access to your wallet, and therefore your bitcoin.
While the wallets provided by third parties often use a variety of encryption tactics to protect your information, the fact that this wallet is online makes it as prone as anything else to hacking. So it’s super important to keep information pertaining to your wallet private. Your private key code is arguably the most important aspect of this. Keeping your private key private does most of the work in keeping your wallet secure. If you need a mobile wallet, consider the free Coin Cloud Wallet app. It’s especially useful if you buy or sell your virtual currency through a Coin Cloud Bitcoin ATM.
Cold storage wallets work similarly to hot storage wallets in most ways. The difference lies in the fact that cold storage wallets work offline. This is considered to be a more secure way of storing large amounts of cryptocurrency, as being offline allows your wallet to be generally off the radar of people searching to steal. Equally so, online wallets are viewed as a good place to store smaller amounts of crypto for everyday use.
Most cold storage wallets are hardware instead of software – meaning they are physical devices (like a thumb drive) that you can hold in your hand.
Lots of people use both types of wallets. You can also take further preventative measures to ensure your money’s security, like backing up your wallet through the use of a flash drive or something similar. Some wallets have an encryption option with an additional password to protect it further.
One creative way of protecting your funds is through the use of multi-user approval or a multi-signature (multi-sig) wallet. This simply means that the wallet can’t be accessed without the approval of more than one trusted person, making it beyond difficult for a hacker to access it.
Overall, your cryptocurrency, like anything else, is susceptible to theft. However, there are plenty of safety measures to take to prevent this, and they’re only getting better. So make good use of them!
Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.
Founded in 2014 in Las Vegas, Nevada, Coin Cloud is the leading digital currency machine (DCM) operator. With over 4,500 locations nationwide, in 48 states and Brazil, Coin Cloud operates the world’s largest and fastest-growing network of 100% two-way DCMs, a more advanced version of the Bitcoin ATM. Every Coin Cloud DCM empowers you to quickly and easily buy and sell over 40 cryptocurrency options with cash.
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