With all the recent attention, and value generation, from cryptocurrencies as of late (pick your favorite: Bitcoin, Ethereum, Litecoin, and more!), the Blockchain team at West Monroe Partners felt it’s important to remind our readers on how to keep your Bitcoins safe, and of a crucial security component: establishing your own digital wallet.
The Mt. Gox hack, and more recently the incident in which hackers stole more than $70 million in Bitcoin from NiceHash, demonstrate that it’s simply unsafe and unwise to park and leave your purchased coins on an internet exchange, or with a company that you may not have a direct view into their security infrastructure. Whenever you store your coins on an exchange, they maintain the “keys”. Think of it as the bank, or in this case – a digital exchange – storing your physical gold coins. Once you transfer them off an exchange into a digital, or physical, wallet (essentially a program that stores your coins on your own private machine), you maintain the private keys (much like you taking possession of your gold coins from the bank). Transferring your coins, and your investment, into a personal, individual wallet on your machine, is like placing your gold coins into your personal safe in your home versus a bank. If a major syndicate wanted a real payout and to put in the work to breach some walls, who would they most likely pick—an individual or a large digital exchange?
We suggest investors use an instance of some of the most reviewed and trusted wallets that are accepted by the community at large. Just because you buy a popular safe brand, doesn’t mean the hackers would know your combination, and remember – once you have your private keys, print them out and keep them safe! Keeping them on a computer provides another avenue for potential theft.
Examples of popular cryptocurrency wallets:
- Exodus: Exodus gives Blockchain asset investors a platform to secure, exchange and manage wealth inside one beautiful application. Exodus currently supports Aragon, Augur, BAT, Bitcoin, Bitcoin Cash, Civic, Dash, Decred, District0x, EOS, Ethereum, ETH Classic, FunFair, Gnosis, Golem, Litecoin, OmiseGo and SALT.
- Electrum: Electrum is a light weight Bitcoin wallet for Mac, Linux, and Windows. Electrum was created in November 2011. The main features of Electrum are: support for hardware wallets (such as TREZOR, Ledger Nano and KeepKey), and secure Bitcoin storage using an offline computer. Electrum is a good option for both beginners and advanced users.
- Ledger Nano S: Ledger Nano S is a Bitcoin, Ethereum and Altcoins hardware wallet, based on robust safety features for storing cryptographic assets and securing digital payments. It connects to any computer (USB) and embeds a secure OLED display to double-check and confirm each transaction with a single tap on its side buttons.
Do you have a favorite wallet that’s not on the list? Let us know in the comments.