Practices Of Maintaining Crypto Wallets [2024]

Introduction

Cryptocurrency may be an alluring investment prospect, but storing digital currency in a Crypto wallets can be a tricky business. More than 40% of investors complain about losing their digital currencies or their private keys every year. Some of these people have lost their digital assets due to misplaced hard drives too.

Crypto wallets – It proves that storing and taking care of digital currency is indeed a challenging task that most people cannot adhere to. For example, you recently purchased tons of ekrona, and you want to protect them. Now, you can’t guarantee their safety unless you know all about the best practices.

Top 5 Practices To Maintain A Crypto Wallet

When you plan to invest in a property, you make sure you store the money in a safe place. The same principle goes for maintaining a Crypto wallets too. Let’s take a look:

1: Don’t Take Custody Of Private Keys

When you want to access a Crypto wallet, you should never put the alphanumeric code in the custody of just one person.

We do not suggest that you keep the key in possession of a company that doesn’t take proper security measures to prevent firewall breaches.

A growing number of vendors now implement proper firewall protection, have ample resources, and put forth the technical capabilities to mitigate the risks.

It would help if you also remembered that with so many types of Cryptocurrencies, they are pretty tricky to recover once they are gone. So, be careful with the private key.

2: Hire Special Vendors For Extra Protection

Hedge funds that are managing customers’ Crypto coins must hire specialty vendors to protect these Crypto funds.

Multiple vendors in the market have specialties in anti-money laundering services alongside other administrative and compliant functions.

On top of that, third-party digital asset custodians are also there to protect the Crypto market.

So, you can hire these vendors who will take special care of your digital wallets and meet custody requirements to audit your assets.

3: Consult With An Insurance Broker

When dealing with a disruptive industry such as the Cryptocurrency world, you need to be extra cautious and consult with an insurance broker.

Once you are matched with a risk management advisor, you will have tailored suggestions for particularly your investment.

These brokers will also teach you all about the claim process if something goes wrong in the market.

Moreover, once you partner with a broker who understands the intersection of finance and technology, he can show you the risks that you would never have thought about.

4: Keep Assets In More Than One Digital Wallet

Suppose you have a hedge fund and have $100 million Crypto assets in your online wallet. So, if someone manages to break into that, he will have access to all your properties.

This is why you should never keep all your assets in one digital wallet. If there is even a remote chance of fraud, diversifying your investments should reduce its likelihood.

You can always limit the capacity of one digital wallet with your custodian at the earliest onset of onboarding.

Now, revisit those assumptions regularly as you scale your assets and think of integrating the best practices into your overall risk management and compliance program.

5: Use Both Hot And Cold Wallets

If we go with the same example again, you have $100 million, and you want to make some trades.

Unless you’re willing to trade $100 million entirely, you don’t need the whole account to be present in one hot wallet.

Depending on your strategy, you are likely trading 1%, 3%, or 7% of that account balance. In that case, you can store more of that money in a cold wallet because it will be a much safer way to keep those assets securely.

It’s like having a bank account where you keep little money for daily chores and having a fixed deposit where you store the maximum portion of your earnings.

Final Takeaway

There you go!!! We have enlisted the best practices to maintain the privacy and security of your Crypto wallets because we were hoping you could earn a substantial return from them. This is why you should follow our advice and get on with the safekeeping process right now. If you want to know more about them, ping us in the comment box below.