Software wallet security basic 101 IMPORTANT!!

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Adriaan Admin

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Jan 30, 2018
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www.bitcoinforbeginners.io
#1
IMPORTANT: READ FIRST BEFORE INSTALLING/USING WALLET SOFTWARE!!

Even though software wallets (for desktop and mobile) are slightly less insecure than keeping coins on an exchange, it is still not recommended to store your coins in this type of wallets. Your private keys are basically not secured enough to handle larger funds and long term storage. It is highly recommended to purchase hardware wallets to secure your crypto funds or even use paper wallets for long term storage.

Software wallets can only be used in these very limited circumstances:
- to practice the use of wallet software, addresses and transactions with very small amounts
- to keep a very small value for convenience to be able to make a quick online payment or transaction.
- to spend a paper wallet with, by sweeping the paper wallet and immediately make the desired transaction (so that it leaves the wallet immediately)
- for any other use, larger amounts of funds, longer term storage, etc., avoid software wallets and use hardware wallets and paper wallets. If your software wallet has hardware wallet security integration, then use that functionality; in that case the wallet can be secured sufficiently.

YOUR SOFTWARE WALLET IS ONLY AS SECURE AS THE COMPUTER IT IS INSTALLED ON AND YOUR SECURITY PRACTICES!

As soon as your computer is compromised, hacked or otherwise breached by malware, you can be sure that your software wallet will be hacked, private keys stolen, wallet funds drained from your wallet! Therefore, try to avoid using software wallets as much as possible and only if you have to. Assume that any amount coins stored in a software wallet, might sooner or later be stolen!

So if you are going to use a software wallet anyway, please at least take these basic security measures if available:

  1. make sure that the device is virus/malware free
  2. make sure it has proper anti virus/malware software
  3. keep all software updated
  4. do not use the device on public wifi; especially not sending any transactions over public wifi
  5. Even at home: best to use a cable to connect the device with the internet (try to avoid wifi/bluetooth) when sending a transaction
  6. Don't visit sites that you don't 100% trust with the computer device where your wallet is installed, don't click on untrusted links and not any ads/ad links. Don't open emails/attachments of sources you don't 100% trust on this device. Preferably use an ad blocker as well on the device (many ads contain malware).
  7. Do not store/backup your 12 word seed phrase on any computer device; keep it completely offline, write it on a paper (in the correct order!) and store it properly from theft, fire and damage. Ideally make an extra backup. Backup your wallet in a private location where no one is able to see your screen. Also, be sure not to backup your wallet over a public WiFi connection, where hackers can snoop on you. YOU NEED TO KEEP YOUR 12 WORD SEED PHRASE SECRET FOR EVERYONE!
  8. At the very least: secure the wallet with a very strong password that isn't being used for any other account anywhere else. A strong password is long, has small+large caps, letters+numbers and symbols. Using a password manager is recommended!
  9. If the wallet software has 2 factor authentification: USE IT
  10. After installation: always make your first transaction with a very tiny amount to test if everything works properly. Then only transact normal amounts when you are confident that you understand the process of the wallet.
  11. if the wallet has the option for email recovery (which means that upon installation a recovery email can be sent): please use only an email address that is not widely known to be associated with you or associated with any other personal accounts. Also this email account has to be protected by 2 factor authentification (2FA); if it doesn't have that, DO NOT have the recovery email sent (only keep the 12 word seed phrase on (sealed) paper/metal)
After these basic absolute minimum security measures, you can gradually expand your security level by implementing the tips from this article about wallet software security, written by the Exodus team: https://support.exodus.io/article/767-how-do-i-keep-my-money-safe.

HOWEVER: in practically all cases it is MUCH safer and MORE recommended to use hardware wallet devices to secure all your crypto!!! Invest in one as soon as possible! Only buy from the manufacturer directly! Also teach yourself to create and keep paper wallets safely and securely!