How to create a secure crypto wallet
"Whoever holds the keys, holds the coins - this is the golden rule in the crypto world .. ignoring it could cost millions of dollars.
Did you know that over 3 billion dollars worth of cryptocurrency has been lost forever due to lost private keys? Stefan Thomas, a programmer from San Francisco, forgot the password to his wallet that contains 7,002 Bitcoins (worth over 200 million dollars today) .. he has only two attempts left before his wallet is locked forever. A true story that reminds us of the importance of security in the crypto world.
A crypto wallet is not like a traditional wallet where you keep cash. It's actually a program or device that stores the private keys that allow you to access your cryptocurrency on the blockchain. The coins themselves always remain on the blockchain, not in your wallet.
There are two main types of wallets; Hot Wallets:
Connected to the internet, user-friendly for daily transactions, but more susceptible to hacking. Includes application wallets, browser wallets, and exchange platform wallets.
Cold Wallets:
Offline, it provides higher security for long-term storage. This includes paper wallets and dedicated devices like Ledger and Trezor.
Andreas Antonopoulos, the famous Bitcoin expert, says: "If you don't own your private keys, you don't own your cryptocurrency. You have a promise from someone else to give you your coins."
So always and forever do not keep your coins on exchanges; any exchange, no matter how large and reputable, is at risk of losing your coins, unlike electronic wallets which are like your private vault that no one else has authority over.
My friend Omar, an experienced crypto investor, follows the 80/20 rule: 80% of his assets are in a cold wallet, and 20% are in a hot wallet for trading. After a failed hacking attempt on his account, he added another step: he split the recovery phrase between two safes in different locations.
Always remember: in the crypto world, you are your own bank.. with this power comes the responsibility to protect your assets. As Warren Buffett says: "It takes 20 years to build a reputation and 5 minutes to ruin it." In the crypto world, it may take years to build wealth, and just a moment of negligence to lose it.
In the next post, we will talk about the basics of security in the crypto world in more detail. Are you ready to secure your journey in the world of cryptocurrencies?
