How to Keep Your Cryptocurrency Safe: 10 Common Mistakes to Avoid

If you own any cryptocurrency, you’ll need to adapt to a new way of keeping your money safe. You can’t just keep your Bitcoins under the bed or deposit your Ether in a bank (at least, not yet). So what are you supposed to do?

Here are 10 common security mistakes people make when handling and storing cryptocurrency.

Mistake 1: Failing to Back Up Wallet Keys

Cryptocurrencies don’t come with online banking and password resets. Instead, you have a set of private keys that allow you to access the funds in your various wallets.

You are solely responsible for keeping your keys safe. If you lose your only copy―perhaps because someone stole your laptop―you will be locked out of your currency forever.

You should make physical copies of your private keys and store them somewhere safe from fire, water, and other damage.

Mistake 2: Not Using 2FA on Crypto Exchanges

Yes, we know, 2FA is annoying. And if I’m being perfectly honest, I don’t use it myself on services like Facebook and Outlook. For me, it’s more hassle than its worth.

But crypto exchanges are another matter. Given their poor track record when it comes to hacks The Worst Cryptocurrency Hacks Everyone Needs to Know About The Worst Cryptocurrency Hacks Everyone Needs to Know About Concerned about the security of your Bitcoin, Litecoin, Ethereum, or altcoin? Here are the largest and most significant cryptocurrency hacks in history. Read More , you need to take every measure possible to keep your account secure, especially since real money is on the line.

Mistake 3: Blind Loyalty to One Crypto Exchange

The dubious history of insecurity in crypto exchanges means it’s prudent to spread your risk around multiple companies. There are lots of great crypto exchanges you can use Where to Buy Cryptocurrency: The 5 Best Crypto Exchanges Where to Buy Cryptocurrency: The 5 Best Crypto Exchanges We'll guide you through the best cryptocurrency exchanges to use, and what to consider when choosing a cryptocurrency exchange. Read More , so why stick all of your eggs in one basket?

Not only is it sound advice from an investment standpoint (different exchanges provide access to different altcoins), but it also means you’ll have less exposure in case the exchange is hacked, becomes insolvent, or faces some other disaster.

Note:You should never store lots of crypto in an exchange! See Mistake 5 for more on that.

Mistake 4: Not Verifying Your Exchange Identity

The Patriot Act of 2001 made it a legal requirement for all banks to undergo Know Your Customer verification―and the laws also apply to crypto exchanges in the US. Even non-American exchanges now undertake the process in order to comply with US law for their American clients.

But here’s the catch: some crypto exchanges let you deposit funds and start trading without completing the verification process. They will not, however, allow you to withdraw money until you are verified.Obviously, the verification process also helps prevent fraud from happening on your account.

So, if you want to make sure your crypto assets are available when you need them, make sure you’ve completed the necessary verification steps on your exchanges of choice.

Mistake 5: Storing Cryptocurrency in Hot Wallets

Hot wallets are crypto wallets that are accessible over the internet―and it’s that connectivity that opens them up to considerable risk. We’ve already mentioned exchange hacks, but you’re also at the whim of forced government shutdowns and some of the other pressing issues facing blockchains .

Instead, you should keep as little money in hot wallets as possible. Obviously if you’re going to day trade or swing trade crypto, you’ll need some amount of liquidity. But generally speaking, crypto should be stored in cold wallets for maximum security. We’ve recommended some secure cold wallets to check out The 7 Best Secure Wallets for Bitcoin and Cryptocurrencies The 7 Best Secure Wallets for Bitcoin and Cryptocurrencies The most important aspect of cryptocurrencies is keeping them safe after buying them! Learn about the most secure wallets for holding bitcoin and other cryptocurrencies. Read More if you’re not sure where to start.

Mistake 6: Sending Crypto to the Wrong Wallet

It’s easy to suffer from wallet overload. You have public keys for your exchanges, for your offline storage, and for all the different coins you own. With so much going on, it’s easy to accidentally send coins to the wrong wallet.

If the crypto you send is not compatible with the wallet you’re sending it to (for example, if you send Bitcoin to an Ethereum wallet), there’s a strong possibility that you’ll irrevocably lose your assets.

Mistake 7: Using Public Wi-Fi Networks

You should never use a public Wi-Fi network (in a school, hotel, airport, or coffee shop) to perform cryptocurrency transactions.

The security flaws in public networks are well-documented. There are lots of ways hackers can use them to steal your data 5 Ways Hackers Can Use Public Wi-Fi to Steal Your Identity 5 Ways Hackers Can Use Public Wi-Fi to Steal Your Identity You might love using public Wi-Fi -- but so do hackers. Here are five ways cybercriminals can access your private data and steal your identity, while you're enjoying a latte and a bagel. Read More . You need to ensure that you don’t inadvertently reveal your private keys or exchange passwords to a snooper.

Check out MakeUseOf’s article on