What is a crypto wallet and how to secure it

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What is a cryptocurrency wallet?

There are different types of cryptocurrency wallets. The main three are offline, online and those held by a custodian. Before explaining 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 see what a private key is, but first let’s dive deeper into the three types.

Offline crypto wallet

Often these are wallets created on paper or in a mobile USB / Bluetooth hardware device.

A paper or offline wallet is one in which you have established a new crypto wallet of your choice, be it Bitcoin, Ethereum, Solana, etc., and save the information to an offline and not digital medium like paper. Paper wallets are the safest form of coin keeping and require careful planning to store this information.

A USB and Bluetooth mobile device is a hardware device that can store highly sensitive information, such as your password and private keys, on a device that you can connect to through cell phones and computers.

Online cryptocurrency wallets

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

Portfolios held by a custodian

Typically, custodian wallets are those of exchanges, like FTX.US, Celsius.network, and Uphold.com. Although you own the coins in these wallets, technically you do not own them, as the custodian keeps and keeps the respective private key secret. However, you are free to withdraw your coins, from these cloud-based wallets, to personal online or offline addresses at any time.

How to keep your wallet secure

Whether you use offline, online, or cloud-based wallets, understanding cybersecurity best practices is essential.

Full 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 number of applications 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, activate the hypervisor or download VirtualBox and create a virtual machine that is only used to access your wallet.

Make sure the operating system (Linux, Mac, or Windows) has the best virus protection. We recommend SentinelOne EDR, an enterprise-grade antivirus program that does much more than the traditional antivirus / malware agent. Additionally, make sure your system is behind a hardware firewall and software firewall for extra protection. Investing in a Next Generation Firewall (NGFW) like Sophos, Cisco or FortiGate is worth the investment.

Also, don’t forget to open emails and browse the net on your chosen system, the less internet exposure you are the better.

Never access your wallet on a public, untrusted computer

This compromises the integrity of your wallet security. Even if you borrow the computer of a coworker, family member, or someone you trust, you don’t know if that system is compromised by spyware.

Never mine crypto on the computer

There is a ton of mining software that you can download. Many of them contain malware that spies on your system, specifically targeting private key chains. If you are going to mine cryptocurrency, do so on a separate computer.

In conclusion

There are other, more advanced ways to mitigate digital threats and potential thieves to acquire your crypto fortune. But if you can follow the simple rules mentioned above, it will go a long way in protecting your data and coins from criminals.

We work with companies around the world to help them identify the security protocols they need to use that are right for their infrastructure and data types. Please do not hesitate to contact us for a consultation if you would like cybersecurity experts to help you create your secure environment.

PS. We like to store our highly confidential information on platforms like 1Password.com with very high rest-to-transmission encryption standards; even the employees of these password managers cannot see your downloaded data and files.

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