Crypto Wallets: How to Protect your Coins

By now, if you’re familiar with crypto currency, you’re familiar with “wallets.”

While they don’t store actual coins, they do store your public and private addresses need to access your coins. 

The public address is the address that people send funds to.

The private address is the “password” that you use to access and send your funds. Never expose your private key until you are ready to spend your funds, otherwise you could potentially lose all of the coins in your wallet.

To understand private keys and public keys, consider a mailbox where you store your physical mail like bills, taxes, legal notices, etc.

It has a unique address.

As a receiver of mail, you have a private address (key) to unlock the mailbox to retrieve what is rightfully yours.  You want to keep this keep to yourself and never hand it to a stranger. You’d keep track of this key without jeopardizing its contents.  Similarly, just like your house address, anyone in the crypto trading world can know your public address to send you coins.

As it applies to coins, a private key is an alphanumeric password/number used to spend/send your coins to another coin address. These are 256-bit long numbers that are assigned randomly, as a private key with your wallet.

A public key is also an alphanumeric address/number and is used to receive coins.

Users can make as many public addresses as they want to receive coins.

To keep your private keys safe, you’d use a wallet.

A wallet stores these keys. There are many types of wallets, including the following:

A hot wallet for example is one that you install on your computer or mobile device. You are in control of the security of your coins using a hot wallet. Please note that since they are on a device connected to the Internet, they can be less secure.

These can include:

  • Desktop wallets like those found at Exodus.io and Jaxx.io.  A desktop wallet is one that is accessed from and lives on your personal computer.
  • Mobile wallets can be stored on wallets on your phone.  Sites such as Exodus.io and Coinomi.com are reputable programs to use.
  • Online web wallets such as Coinpayments.com and Jaxx.io are reputable.  In this case, a third party stores your coins on the cloud and can be secured with multi-signature wallets.

A cold wallet can help maintain higher-levels of security to protect your coins by storing them offline.  Offline storage keeps your coins and data out of the reach of potential hackers.  This is arguably one of the safest ways to secure your assets with a cold storage device.

Some hardware wallets to be aware of include:

  • Ledger Nano S
  • Trezor
  • KeepKey

However, be careful to avoid fake wallets.

Fake Wallets

When investors use virtual wallets, they open themselves to risk by connecting online, where scammers play and steal.  The problem is that fake wallets are found both online and in mobile app stores, so cautious is a prerequisite.

According to CoinDesk:

More than $3.3 million has been stolen as part of an elaborate scam that took advantage of bitcoin users seeking to claim their share of the newly created cryptocurrency bitcoin gold. Perpetrated by the operators of a website called mybtgwallet.com, the scheme prompted users to submit their private keys or recovery seeds as a means to generate bitcoin gold wallets, as seen on an Internet Archive Spreadsheet. Shortly after users did so, however, the cryptocurrency holdings in their wallets were sent to different addresses. At least $30,000 in ethereum, $72,000 in litecoin, $107,000 in bitcoin gold and more than $3 million in bitcoin were confiscated, according to self-reported numbers.

Another fake wallet, MyEtherWallet had to be removed from Apple’s App store after becoming incredibly popular. 

What’s interesting is that on December 10, 2017, developers of the real MyEtherWallet.com tweeted, “This is NOT US.  We have file reports and e-mailed and reported.”  A day later, Apple removed the fake app from its store.

Unfortunately, prior to the removal, 3,000 people had downloaded the app, netting the person behind the scam as much as $15,000 in a very short period of time.

One  way to avoid such as issue is to 1) use a hardware wallet and 2) be aware if you’re using a fake site. They exist, too.

Scammers are a crafty bunch, seeing to steal millions worth of coins.

They’ve gone as far as created URLs that appear authentic, but are not. One way to spot a fake site is by looking for “https” in the URL.  If it’s not there, stay away.

If you look at a site such as CoinsMarkets.com, you’ll notice it does have the “https.”

That tells us it’s secure and has obtained the SSL (secure sockets layer) certificates. If a company has an SSL it also tells us the company can be trusted.

However, scammers have found a way around that, too.

Some sites can display “https” but make subtle changes to the site address. While it’s not clear how they’re securing an SSL, spoof exchanges can be created to look like an original. For example, hackers once added two small dots under Binance.com so it wouldn’t appear anything was wrong at all. 

That being the case, unsuspecting users enter their data into the fake site and are hacked. 

The best way to avoid this scam is by manually – and correctly typing the URL address into your browser address bar. 

Double check your URL especially when it comes to crypto sites.

Trust me – there are plenty of scammers that would love to fool you. Trust no one.

While the world of crypto can be exciting and rewarding, it’s not always safe.

Be aware of what you’re buying and selling, and whom you’re communicating with at all times.

If not, you could lose everything.  And that’s the last thing we want to see happen.