Using and storing cryptocurrencies is risky and any small mistake can cause users to lose all their money. Here are 5 mistakes to avoid to keep your cryptocurrency wallet safe.

Is a cryptocurrency wallet necessary?

Cryptocurrency wallets are necessary for trading cryptocurrencies, there are many different types of wallets available, depending on the user's needs. You can choose between hot wallets or cold wallets, you can also delegate the custody of your cryptocurrencies to any trusted centralized exchange like Binance.

Binance has just launched Web3 Wallet. Binance Web3 Wallet serves as a digital gateway for dApps, providing users with a secure and streamlined way to manage cryptocurrencies, perform cross-chain token swaps, and deliver performance and interactivity with multiple blockchain platforms.

Why Use Binance Web3 Wallet

Binance Web3 Wallet uses an advanced cryptographic security system that uses Multi-Party Computing (MPC) technology. MPC is used to generate three “key-shares”, which are stored in the Web3 wallet, the cloud, and your device.

The key-shares are secured with your recovery password so they are very safe.

There are 5 reasons why you should use Binance Web3 wallet:

  • Convenient

  • Easy to use

  • High level of security

  • Self-management

  • 24/7 user support service

5 Mistakes to Avoid to Keep Your Cryptocurrency Wallet Safe

Use hot wallets to store large amounts of cryptocurrencies

Hot wallets are great for quick transactions, but they aren’t as secure for protecting large amounts of money. They’re directly connected to the network, which increases the risk of being hacked. If a hacker finds a vulnerability, you could lose all your money.

The main danger is the exposure of the private key, so the private key is very important and must be kept absolutely safe.

This doesn't mean that cold wallets are completely secure, but they force hackers to employ more complex techniques.

Hot wallets are perfect for storing small amounts of cryptocurrency as they are easily and quickly accessible and allow for flexible operations. However, they are less secure than cold wallets, so if you have a large amount of cryptocurrency that you want to keep for a long time, you should use a cold wallet.

Buy back old cold wallet

Cold wallets (also known as hardware wallets) are a secure storage solution. To save money, some people have bought old cold wallets online, which is not recommended and poses many security risks.

The best way is to buy a completely new, unused cold wallet. And note that you should choose a reputable unit to buy from.

In addition, if your cold wallet shows signs of damage, such as the button not working properly, you should immediately replace it with a new wallet. Note that you should buy a new wallet, not repair it.

Use only one wallet

Using only one wallet can be disastrous. If the wallet gets hacked, you lose everything. “Never put all your eggs in one basket,” both when it comes to portfolio management and when it comes to protecting your capital.

All your funds in the same wallet, this is not recommended, using multiple wallets is a highly recommended strategy. You can use a hot wallet for daily transactions and a cold wallet to protect your assets long term.

Additionally, according to security experts, "Users should have a backup hardware wallet to handle unforeseen events."

Seed Phrase

Seed Phrase (also known as seed word) is the key to access your cryptocurrency. Securing and storing the Seed Phrase is one of the most important things.

It won't help if you use multiple wallets but don't properly secure your Seed Phrase.

The best way is to write down the Seed Phrase on paper and put it in a safe or somewhere in your home where you feel safe.

According to security experts, you should not save Seed Phrase on your phone, you should not take a picture of Seed Phrase and you should not save Seed Phrase to your personal cloud.

Less use of wallet

Even if you plan to hold for the long term, you should still use your crypto wallet regularly. You can buy a little bit, sell a little bit, or wait for a good time to DCA more.

Or you can also move crypto back and forth between your wallets. If possible, use your wallet regularly, even for small transactions.

In a previous study, crypto whales typically move their crypto every 4 > 6 months.

Conclude

There are very secure wallets, but believing they are 100% secure and ignoring the risks is a serious mistake.

Believing that your wallet cannot be hacked or that your assets are completely safe is the first step to losing your money. When managing any digital asset, there are always risks, mainly human ones. Carelessness when signing transactions or exposing your private key/seed phrase makes it easy for scammers and hackers to steal your money.

No cryptocurrency wallet provides absolute security, but it is possible to achieve an optimal level of security to prevent and avoid hacks, theft and fraud...this is up to the user to decide.

It is important to choose the right wallet for your use case. Hot wallets provide an acceptable level of security for low-volume daily transactions. For long-term holding or protecting large amounts of tokens, cold wallets are recommended.