Imagine waking up one day, checking your crypto holding, and being met with nothing but zeroes. You frantically check your transaction history only to find that a hacker had drained your entire portfolio while you are sleeping.
This isn't a Steven King short story, it happens all the time. The anonymity and permanence of the blockchain (all great things) also means that hackers can steal your Bitcoin and there is not much you can do about it.
How much security you need depends on how much Bitcoin you are storing. If you are testing the waters and have a small amount of crypto, a phone wallet or desktop application should do the job. However, the more cryptocurrency you hold, the more you have to lose.
New Investor ( < 1000)
The first step in securing any crypto investment no matter how small, is to get it off the exchange. Exchanges are targets for hackers because require you to give personal information and are easier to hack than the blockchain. Exchanges are clearly not somewhere you want to store your money. A basic wallet application such as Exodus or Coinami should suffice. When setting up the wallet, save your seed phrase somewhere secure and preferably non-digital.
Intermediate (1,000 - 10,000)
Now you are playing with real money and real consequences. How you protect that money needs to reflect that. You'll want to get a hardware wallet at the minimum. Depending on if it is legal, start using mixers/tumblers to mix your coins and keep your privacy.
As the amount of cryptocurrency you store increases, your wallet can become a target. To hide your stash, start using a wallet application that enable you to create multiple wallets quickly. Wallets such as Sparrow or Wasabi are great places to start.
Advanced (10,000 - 100,000)
In addition to the previous security measures, now it is more important than ever to protect your privacy and hide your transactions. Moving and holding this kind of money makes you a target. One key vulnerability in the Bitcoin network (and other blockchains) is that the public node your wallet is attached to, can see your IP address. This means that they can tie your wallet ID to your IP and track you. Don't rely on these pbulic nodes. Download and run your own node as well as using a trustworthy VPN or the Onion network. Start considering and using Multi-signature wallets that require two keys to send a transaction instead of one.
Whale (> 100,000)
This requires the highest levels of security.
Some of the advanced steps are:
- Using a separate computer running a secure OS just for accessing your wallet.
- A multi-sig wallet is set up with different brands of hardware keys in the event that a vulnerability is found in a single key.
- Multiple wallets with separate balances to obfuscate your total balance.
- Only deposit currency cleaned with a Tumbler
Don't underestimate the hackers
There are many stories of hackers going to extraordinary lengths to steal someone's crypto. From sim swapping to having an inside man, there is nothing a dedicated hacker won't do to steal your crypto. Every transaction is irreversible, meaning that once it's gone there is nothing you can do to recover it.
