Hey Steemians,
Let face it, if you have sort of considerable amount of crypto in an online account or wallet you are constantly worrying about a potential cyber attack... there have been so many big volume thefts via hackers infiltrating online exchanges and wallets. The largest on record was a whopping $450 million stolen from a Tokyo bitcoin exchange. This exchange was one of the biggest and most secure at the time.
So how can we protect ourselves
The answer is quite complex because there are many different ways to secure your funds... the level of security along with the pro and cons should help you decide which option is best for you. As a general statement HOT storage (or online storage) is much easier to compromise than COLD storage (offline storage). For that reason the below methods are focused on COLD storage only. I suggest that you only use HOT storage for funds that you are actively trading and using... not for long term investments.
Below is a table that outlines some of the advantages and disadvantages of each method.
| Method | Advantages | Disadvantages |
|---|---|---|
| Cold Storage devices | Convenient, impossible to hack remotely, easy to plug and play for fund transactions | If lost or stolen all is lost, can be inconvenient to access funds if key is locked away, could be destroyed by natural disasters or fires, most expansive option, risk of company going out of business and support etc lost. |
| Two-Factor Authentication | This is the easiest and most common level of security, most exchanges now have it as stock standard, | not 100% safe, hackers can still get thru, if email or phone or google authenticator is compromised so too is your cryptos, still vulnerable to exchange hacks. |
| Multi-Signature Wallet | This is a great wallet for people who have joint funds, It requires two people to enter unique private keys to access the funds, for this reason it is infinitely harder for hackers to compromise and means your funds are safer. | Every outgoing transaction requires two passwords and potentially two people, if one key is lost or stolen then all the funds are lost. |
| Desktop Wallet | Wallet saved to a particular device, harder to hack and doesn't have the issue of exchange hacks, | Only accessible from one device, can be compromised if device is stolen or hacked, if device is damaged or destroyed the wallet is lost. |
| Paper Wallets | Its an offline wallet, that can not be hacked in any way, there is no connection between the wallet and any online exchange or service, its essentially just a printed version of your private key, easy to use for receiving funds | If lost, stolen the wallet is lost, if saved digitally there is potential for hacking and theft, its really difficult to make outgoing transactions, the funds are not easily transferred back to HOT storage, |
So I hope you can each assess your individual requirements to work out what solution works best for you.
My preferences
Because I am a strong believer in Crypto-currency and blockchain tech, im in it for the looong haul. For that reason I prefer to use Paper Wallets so i can store the investments offline in a save place. One day in the future i will cash them in but for now they will stay safe and hidden. I use services likeWallet Generator to make the paper wallets... unfortunately not all coins are supported and you may need to find other wallet generators to cover all the coins you own.
The small amount of coins I have in HOT storage are coins that either are not supported by paper wallets or that I plan to make a trade with in the near future. For these coins i make sure i store them in an online exchange site with two-factor authentication. I hope that this helps you guys and no-one has to suffer the tragedy of having their hard earned coins stolen through an online cyber attack.
Peace!
