Offline Storage and Security

What's the best way to assure the security of your cryptocurrency? Coin Pursuit takes a look at the concept of offline storage as a means to that end.

When you're directly accessing your cryptocurrency—while making a purchase or a trade, for example—your currency information is available to you and to anyone else who has the know-how to access it. For quick transactions, this isn't normally a big deal; in the short period of time it takes for you to finish your business, a hacker can't do any damage. But, what about all the time your account isn't in use?

Online access to your currency should only be necessary when a transaction is taking place; otherwise, it should be kept in offline storage. If you have a first-party wallet and are responsible for its upkeep, your wallet should be stored where no one can get to it. You can do this by turning your computer or mobile device off whenever it's not in use. However, that's not a realistic solution for most folks, so it's a good idea to invest in an external hard drive that can easily be disconnected from your computer when it's not needed. Storing your wallet there is the best way to keep your digital currency information offline. As far as your mobile device goes, the same principle applies: keep your info on an external drive, and download it to your smartphone or tablet when you know you'll be needing it for your mobile wallet. Similarly, if you hold a paper wallet, the hard copies of your currency information should be kept safely under lock and key.

If you have a third-party wallet through an exchange, ask them about their procedures for offline storage. News outlets are full of articles about digital currency exchanges that didn't have sufficient offline storage, and some very large thefts have taken place because of that. Unfortunately, many exchanges don't yet have protections in place for when that happens, so when your currency's gone, it's gone forever. Exchanges are taking notice of this, and things are changing quickly—so check with them before you hand over your investment.

Now that you have the information and resources you need to make an informed decision about the wallet or wallets you're gonna keep, we invite you to move on to our next section. where we'll discuss the merchants who accept digital currencies, and how you can shop with them.

Next Wallets Topic: Why Are There No Apple Mobile Wallets?  

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