How to safely store your bitcoin: Beyond hardware and software cryptocurrency wallets
Crypto wallet security has always been a big concern among the bitcoin developer community, but of late, as these assets grow in mainstream popularity, most traders today are losing sleep over banking their holdings.
Over the years, crypto heists have drained $1 billion worth of cryptocurrency directly out of holders' wallets, still far from matching the scale of the $473 million Mt. Gox hack in 2014 or the $534 million Coincheck hack. In other words, crypto investments remain appealing to criminals and under these circumstances, hot wallets or softwares that attempts to protect funds and private keys on an online server, offer less sophistication.
On the other hand, most exchanges and professional traders choose cold storage methods like hardware devices to literal paper wallets, where the digital key is printed out on a piece of paper, remaining offline and outside computer networks.
But none of these are completely oblivious to security threats. It was only last December when hackers stole over $8 million worth of NXM tokens from CEO of Nexus Mutual, Hugh Karp's hardware wallet in a targeted attack. So does this mean that cybercriminals have adapted to even the most effective wallet security measures? Possibly. But most wallets available today offer far more advanced technologies and are different from their forebears.
For instance, multisig wallets are difficult for hackers to infiltrate as these wallets spread private keys out on different devices. Even social security wallets, a type of smart contracts have recently emerged as an alternative to provide better security. The idea was famously encouraged by Ethereum's co-founder Vitalik Buterin who believed that wide adoption of these wallets, in particular, will help prevent hacks and thefts of crypto users' funds.
Buterin has always believed that better wallet security would be an important step toward adoption and hoped that future wallet designs could improve on social recovery technology.
Crypto beginners, who are only dipping their toe, use hot wallets like web extensions or software wallets. These are easy to use and typically offer some amount of security. Traders can get basic fund protection with custodial wallets, like web exchange wallets where you store your crypto on third-party servers without holding a private key.
Long-term hodlers, on the other hand, prefer noncustodial wallets that grant a higher level of security and control over their funds. This includes big investors, and even exchanges like BitOasis that currently have all crypto assets in cold storage, the most effective way to combat cybercrime, to date.
Undoubtedly, the crypto economy is in need of better security for wallets. But BitOasis ensures that criminals aren't using the platform to resell stolen crypto by proactively taking responsibility with high KYC standards and supporting local law-enforcement to combat such crimes. To learn more, visit BitOasis!