Owning crypto is not like keeping cash in a bank. A single mistake or breach could cause your holdings to vanish without a trace.

While banks are also vulnerable to these risks, they’re still physically present, unlike crypto, which all operate on blockchain. There’s no entity to reach out to for compensation in case of loss. You have only yourself to rely on.

In this guide, we’ll explore how to store cryptocurrency safely all by yourself. But first, we’ll discuss the gravity of the issue.

Why and How to Store Cryptocurrency Safely?

A surprising number of crypto investors make a risky mistake by keeping their entire portfolios on the very exchanges they use for trading. While these platforms are designed for buying and selling, they aren’t built for long-term asset storage. Exchanges are high-value targets for hackers, and history has shown that even major platforms can suffer breaches. So if you leave your crypto sitting on an exchange, you’re essentially trusting a third party with your assets.

This goes against the very idea of decentralized finance. The exchange platform—a centralized entity— knows everything about your holdings.

In extension, they are under government regulation which means account seizure is a possibility.

This leaves you with decentralized storage solutions as the safest bets. And luckily there are many such solutions. They are called crypto wallets.

These wallets are purpose-built for storing, managing, and protecting cryptocurrency.

They give you full control over your holdings, unlike exchanges, which hold users' funds collectively and are constantly exposed to online threats like crypto scams.

There are two primary types of crypto wallets:

Hot Wallets: These wallets are connected to the internet, which makes them convenient for frequent trading and quick access. However, their internet connectivity also makes them more vulnerable to cyber threats.
Cold Wallets: These are offline storage solutions include hardware wallets or paper wallets. Since they don’t have an internet connection, they provide significantly better security against hacks, malware, and unauthorized access.

Top 5 Crypto Security Best Practices

Simply transferring your crypto assets to a safer wallet isn’t enough to secure your crypto portfolio. So, how to store cryptocurrency safely for increased protection? You need to implement the following crypto security best practices for better peace of mind.

1. Diversifying Storage Methods

Relying on a single wallet or exchange to store all your crypto holdings is a high-risk move.

The platform can suffer a security breach, technical failure, or regulatory crackdown at any moment. And the result can be highly devastating for millions like you. In other words, you could lose access to your entire portfolio in an instant. So spreading your assets across multiple storage methods is a necessary risk management strategy.

You can split your holdings between multiple hot and cold wallets as well as a small required amount for trading on exchanges. Splitting your holdings translates into splitting risks. Even in the worst-case scenario, there’s no risk of losing all your holdings.

2. Protecting Your Seed Phrase

While we’ve covered hot and cold wallets, there’s another critical element to securing these wallets: your seed phrase.

A seed phrase is a randomly generated set of words given to you when setting up a crypto wallet. For example, a typical seed phrase might look like this:

"river fiction breeze artist vocal slice adapt yellow swap magnet surface humor."

Whoever holds your wallet’s seed phrase can restore and access your wallet, even if the original device is lost or stolen. This means you need to be very careful about how and where you store it. And don’t risk solely memorizing it because the phrase is so random you’d lose any memory of it after a few days of no use.

How to Properly Secure Seed Phrase

The safest approach is to write it down on paper and store it in a secure, offline location. Never save it digitally (e.g., in notes apps, cloud storage, or email inboxes). All these places are hot targets for hacking, malware, and phishing attacks.

For added protection, you can make multiple copies and store them in separate locations like a fire and waterproof safe.

3. Implementing Strong Passwords and Two-Factor Authentication (2FA)

Another non-negotiable for portfolio security, especially cryptocurrency scams prevention, is using strong passwords and 2FA.

A weak password is one of the easiest ways for hackers to break into your crypto accounts. You’d be surprised to know how easily experienced hackers crack weak passwords. Therefore, for every crypto wallet, exchange, or related service, you should have a unique, complex password that uses a mix of all characters.

Once you have a strong password, enable Two-factor authentication (2FA) to enhance the security. 2FA adds a second step to the verification process by requiring a code to confirm your identity.

However, not all 2FA methods are equally secure. While SMS-based 2FA is better than nothing, it's vulnerable to SIM-swapping attacks, where hackers hijack your phone number to intercept authentication codes.

Therefore you should use an authenticator app like Google Authenticator. The Google Authenticator app generates codes locally on your device and isn’t dependent on your phone number. This multi-layer authentication reduces the risk of crypto scams and prevents unauthorized access to your holdings.

4. Staying Vigilant Against Cryptocurrency Scams

While we’ve explored how to store cryptocurrency safely, a slight negligence from you can still put your portfolio at risk.

Scammers are constantly devising new ways to trick users into handing over their funds. Their favorite platform is social media, where you can trust people easily. They can use phishing attacks where they create fake wallet apps with almost the same login pages.

Then there are rug pulls, where developers hype a new cryptocurrency project, attract investors, and then suddenly drain the funds, leaving holders with worthless tokens.

As you can see, your wallet or crypto exchange’s security measures cannot protect you against these scams since they involve human error. Therefore the best defense against scams is skepticism. If an offer seems too good to be true, it probably is.

Avoid clicking on unsolicited links, especially those sent via direct messages or emails. You should also regularly consult trusted crypto news sources to stay aware of new scam tactics.

5. Regularly Updating Software and Firmware

After implementing all the crypto security best practices, regularly updating your apps is just as important.

Updates include critical security patches that close off known vulnerabilities and protect your assets from emerging threats. You should make it a habit to check for updates regularly and install them as soon as they become available. If that’s too much work, you can enable automatic updates.

Trade on CoinEx and Stay Secure!

You just learned why and how to store cryptocurrency safely. Implement these best practices and you’ve eliminated almost all risks.

As noted earlier, crypto exchanges are not the ideal places to store your holdings with exceptions like CoinEx. The exchange goes the extra mile by implementing advanced security measures. It also employs the concept of a hot and cold wallet to protect your portfolio.

Sign in to CoinEx now and buy, sell, and store cryptocurrencies securely.

How to Secure Your Crypto Portfolio?