The decentralized finance market and cryptocurrency are increasingly attracting the attention of investors with the huge profits they bring. However, new users are still quite hesitant in accessing the market due to barriers regarding safety and security in storing assets on e-wallets. So how can investors protect their e-wallets and assets with peace of mind? We will learn through the article below.
1. What is a crypto wallet?
Decentralized wallet or decentralized electronic wallet, is a type of electronic currency wallet not controlled by any organization or third party, used to store and manage electronic assets such as tokens or NFT. In addition, users can also use the wallet to interact with decentralized applications (Dapps) in the blockchain.
Because it is not managed by any organization, users will have full control and management rights over their assets. Usually these types of e-wallets will be controlled by seed phrases and private keys.
2. Types of crypto wallets
Currently, there are two most popular and widely used types of crypto wallets: hot wallet and cold wallet.
2.1. Hot wallet
A hot wallet is a type of electronic wallet that can connect to the internet and is often used to store cryptocurrencies to make purchases on decentralized exchanges or interact with applications. decentralized use.
These types of wallets will often be managed by a seed phrase consisting of different random phrases and the private key used specifically for that wallet.
Therefore, when using a hot wallet, users are at risk of losing their assets if they accidentally lose the seed phrase, reveal the private key or risks when connecting to the Internet such as cyber attacks. networks, connecting to the wrong scam website, links with malicious code,...
Some popular hot wallets: Metamask, C98 Wallet, Trust Wallet,...
2.2. Cold wallet
A cold wallet is a physical electronic wallet that is stored offline and not connected to the internet. These types of wallets are often produced in the form of hard drives such as USBs, CDs, etc.
Cold wallets allow users to safely store and protect private keys thanks to the secure chip design. Most of these cold wallets will be secured with a PIN code to protect the device, so in case you forget the PIN code, there will still be a risk of asset loss.
Therefore, when using a cold wallet, the user's assets will minimize the risks related to connecting to the Internet but it is not too convenient for users when they want to access or use assets.
Some popular types of cold wallets: Ledger Nano S, Trezor, Safepal,...
3. How to avoid risks and keep your e-wallet safest?
3.1. Store seed phrases and private keys securely
Seed phrase is a random secret phrase, used to recover the wallet in case of forgotten password. This is the only tool to access the wallet, so users need to store their seed phrase in an absolutely safe place. Because once the seed phrase is lost, the user will not be able to access their wallet again, which also means that the assets stored in the wallet will be at risk of being completely lost.
In addition, the private key is also considered the key that allows users to access the wallet. Therefore, anyone with the private key will have access to your account.
Therefore, users will need to store the seed phrase and private key in the most secure way, avoiding losing control of their assets to the wrong hands.
3.2. Use strong and difficult to guess passwords
Users should use passwords that are a random combination of letters, numbers and special characters that are not too personally related or easy to guess. In addition, we should also avoid using the same password for many services or wallets, because once the password is revealed in the wrong hands, they can use that password to access all wallets. personal or important information.
Every few months, users should change their password to make their wallet as secure as possible. However, this can lead to users forgetting the new password and getting confused between passwords, so you can store passwords in separate safe places.
3.3. Restrict access and wallet connection to unsafe websites
As mentioned above, most of the main risks of e-wallets come from being able to interact and connect to the Internet, leading to dangerous compromises or attacks in cyberspace.
Therefore, before accessing or connecting the wallet to any website or application, users need to carefully check whether the website is reputable and secure, and whether the website's domain name is suspicious. Are not,…. Once accessed and unsafe websites, user data can be controlled and stolen, causing damage and loss of property.
3.4. Use the multi-signature feature
If the wallet is storing a large amount of assets, users can use the multisig (multi-signature) feature to ensure asset safety. Sometimes, users will tend to operate too quickly without paying attention. With this feature, every time any transaction is made, authentication will be required from authorized people. Without permission and confirmation from all authorizers, the transaction will not be possible.
This is a quite useful feature because it requires many requests and thorough checks from many people before making an interaction or transaction. Even in cases where hackers or scammers deliberately take advantage to take over asset management, they will need to go through more barriers.
3.5. Store assets on cold wallets
Although cold wallets have their own disadvantages, such as not being able to always carry them with you to access or directly interact with blockchain applications, cold wallets will help users completely avoid risks from the Internet such as Cyber attacks, phishing websites, malicious links. So if users intend to keep assets for a long time, storing assets on a cold wallet will be one of the most optimal options to protect their assets safely.
3.6. Divide assets into multiple wallets
When accessing the decentralized finance space, user demand is quite high. Therefore, users should divide their assets into multiple wallets with different uses to avoid risk and loss in case one of those wallets is attacked.
For example, users can use a private wallet just to store assets, which will never access any website or connect to any application. When wanting to experience DeFi or blockchain applications, users can use a separate wallet, only saving a small fee to pay for transactions while experiencing the application. In case those platforms are attacked or infected with malicious code, affecting your wallet, the amount of assets in them will not be lost or at too much risk.
4. Conclusion
Crypto wallet is one of the most important applications of crypto, a gateway connecting users to the web3 world. Anyone who wants to participate in the decentralized finance market will need to set up their first wallet to be able to start participating. However, not everyone understands the dangers and risks that can occur during the process of using wallets and storing assets.
Above are the most basic and optimal methods to ensure the safety of users' electronic wallets and assets. Hopefully the article provides useful information for users, follow the Bigcoin team to update more information about the crypto market.
