Digital money, one of the most popular finance topics of last year, will continue to be one of the hottest issues this year.
Ignoring the market decline over the past few days, digital currencies have provided tremendous returns to investors; The price of Bitcoin, known as the gold of the market, has increased about 10 times.
Digital assets and returns in the crypto money market pose a security risk in any part of traditional finance like never before.
If you think someone else is using your credit card or deposit card linked to your bank account and you are trading, you can call your bank and fix things. However, there is no such safety net in the crypto money market.
For this reason, you need to secure your digital assets with your own effort in order to invest in the market safely and keep your returns.
According to CoinMarketCap, the value of digital assets in the crypto money market is just over half a trillion dollars. This means that if all market players do not take adequate security measures, a large amount close to half a trillion dollars can fly away.
Public Key and Private Key Separation
You may have heard of public and private key concepts in the Bitcoin context. These two concepts are extremely important for security.
For example, let’s say you have created a software or hardware wallet to secure your digital money / assets. When you do this, you also create a private key for your wallet security and a public key for money exchange.
Money transactions are carried out via the public key, which is a long string of letters and numbers. The public key can also be likened to the IBAN number of a deposit account in terms of how it is used. The sequence of letters and numbers of the public key is completely different, but looks like this:
It may be impossible to read, but sequences of letters and numbers similar to this serve as an identifier on the market. The public key does not have to be kept confidential and can be shared with a person to send payments or shared with large audiences for different purposes, such as fundraising.
Like a public key, a private key consists of a series of mixed numbers and letters. But the private key is a piece of confidential information. The private key should NEVER be shared. Because if someone gets your private key, they get access to your wallet and all your money. If this happens, you can be sure that you will never see those coins again.
It is for these reasons that you should never share your wallet’s private key code and preferably store it in a safe place with no internet access.
Crypto Money Exchanges Not Safe
Many digital asset traders keep their assets on brokerage exchanges. This is a dangerous choice, because the stock exchange you hold your assets also holds your private keys. Like a bank holding your money for you.
However, there are significant risks to the security of crypto currency exchanges. This separates them from banks. Large-scale exchanges such as Coinbase, for example, take great security considerations to insure digital assets or store them in cold stores, but nevertheless assume no responsibility for a possible reversal.
One of the popular crypto currency exchanges of the time was Mt. Gox announced that 850,000 Bitcoins were stolen in 2014, and the company lost losses. If the Bitcoins didn’t fly, the money would be worth about $ 12 billion today.
Bitfinex, another stock exchange that continues to operate today, was attacked in 2016 and lost 72 million dollars. The stock market has improved security, but it has undoubtedly become a bigger target for hackers.
In other words, stock exchanges with significant trading volumes such as Coinbase and Bitfinex are still not safe enough, even with many aces for security. So are the digital assets you hold on the stock exchanges.
There are two ways to secure digital assets: hardware wallets or software wallets.
However, it can be said that software wallets are not as secure as hardware wallets. Because in the last months for Bitcoin “safe software wallets” shown in the wallet named Electrum appeared to have a dangerous deficit.
And that leads us to the best way to hide digital assets – hardware wallets.
Unlike software wallets installed on devices such as computers and smartphones, hardware wallets look just like USB sticks. The most popular hardware wallets, also known as cold storage, include Trezor and Ledger Nano.
Hardware wallets can be a bit expensive compared to free software wallets (around 600 Turkish Liras), but if you have significant amounts of digital assets, this may be the best investment you can make in the first place.
This type of hardware wallet can store multiple digital assets to the extent that developers are supported. Ledger supports many subcoins, including Nano Bitcoin.
There are also important points to consider when buying a hardware wallet. Because a person who bought a hardware wallet from the popular second-hand shopping site eBay in recent weeks, Reddit shared that their digital assets were stolen.
To eliminate such risks, you can:
Get a zero product
Buy from secure vendors
Where available, obtain from the manufacturer’s official addresses
To summarize, don’t keep your digital assets on stock exchanges and share your private key. Choose a secure wallet (or multiple) and keep your assets safe.
The crypto money market is difficult, even protecting assets is troublesome, but without a doubt the gains are worth it.