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The interest in crypto is growing steadily even more than before and now, digital assets are something you have to manage. From cryptocurrency to sports collectibles as digital assets, there’s a growing need to handle these properly. With more types of blockchain assets, you need to find a way to care for all these valuable digital products.
Control and protection of digital assets need to become more robust as it becomes an important part of asset management. If you’re looking towards managing your digital assets as efficiently as you can, here are x tips to optimize your process.
- Protect Your Private Keys
When it comes to blockchain products and crypto, private keys are the most valuable asset to protect for your business. Private keys are the only evidence that you own digital assets. As crypto assets are bearer instruments, meaning you only own them if you hold them, these keys are a must-protect.
Once you lose your private keys, all investments you put forth, including crypto taxes you paid for, are down the drain. The alphanumeric code that gives you access to your assets should not be saved on a single piece of paper. It should be neither on a cloud nor with an organization that does not have appropriate firewalls and security.
If you choose to have a digital asset management company handle your property, make sure they are up to the task. Confirm their security, what resources they have, and how they can mitigate risks. If you have to do it yourself, secure a copy of your keys in a safety deposit box or store crypto seeds to protect your assets.
- Diversify Your Digital Wallets
Most people who are into blockchain assets likely have their property stored in several digital wallets. If you’re not the type who spreads around your assets, there is a more likely chance that you lose everything in one go. Whether it’s from theft or the asset management company getting hacked, you don’t want to put all your eggs in one basket.
If fraud or hacking occurs at some point, diversifying your asset storage through several digital wallets can help you mitigate potential loss. Rather than lose $10 million in assets, for example, you will only lose $1 million if you spread it in 10 digital wallets.
With diversification, however, comes complexity. With more digital wallets, you would also need to track more private keys, more seed words, and more passwords. Frequent asset tracking is a must and portfolio management apps can make your life much easier in the long run.
- Beware of Mobile Phone Phishing
Many people who invest in cryptocurrency and non-fungible tokens (NFT) use their mobile phones to manage their property. As many of these commodities are soaring in value, phishers are becoming more and more incentivized to steal your credentials. It’s important to be careful with the sites you access with your phone.
Be careful with the apps you install, especially if you enjoy sideloading them. iOS in general only has to worry about phishing sites and emails but Android users need to be extra careful. Sideloaded apps from unreputable sources can have viruses and worms that can track your keystrokes.
Install antivirus software on your mobile phone if you can. Activate security measures to prevent hackers from gaining access, including OTPs, two-factor authentication, and even device-based authentication.
- Use Security Measures You Can Handle
When it comes to security measures, one important thing to remember is to use security measures that you can handle. Many people who work with digital assets mostly know their way around 2FA, seed words, and private keys. Even then, not everyone has the same level of computer skills and knowledge of digital security.
It’s a must that you understand the pros and cons of digital security measures that you use. Whether it’s passwords or two-factor authentication, you want to be comfortable around what you use.
If you’re more comfortable with an all-digital security protocol, by all means, go all-digital. If you’re the type who likes your security written down or you’d rather use a hybrid system of security, it’s better to go with it.
Don’t overcomplicate your security, to the point that password resets become a must for you. Strike a balance between security and complexity to prevent sacrificing the contents of your digital wallet.
- Beware of Scams and Get Rich Quick Schemes
One of the biggest pitfalls for rookie traders and digital asset owners is the high-yield investment program (HYIP). This is a fancy word for a get-rich-quick scheme and it’s ultra enticing to get consistently strong profits from your investment. Much like normal stocks and investments, these never bode well for those who fall for them.
Most HYI programs have rogue operators that prey upon small and rookie investors. The high returns are ridiculous and are mostly impossible without any hitch. They usually start by showing you high-yields, only to run away once you go in too deep.
Make sure to remember that any investment strategy that generates 50 to 100% gains is not sustainable. By knowing this, you can manage your digital assets better and prevent losing your property.
- Never Share Your Private Keys
Whether you’re the type of likes to actively invest their digital assets or save them for a rainy day, never share your digital private keys with anyone. As we noted before, most digital assets are bearer-owned, so anyone taking your private keys and locking you out of them gives you no recourse to get it back.
Make sure to keep your private keys, seed words, and other security materials out of reach by anyone other than yourself. If you plan to eventually bequeath your digital assets through a will, account for the technical skill of the inheritor. The last thing you want is to have a relative bring your assets to a more knowledgeable third party and get them swindled under their noses.
As for yourself, save passwords in places you can access and create redundancies in different places. While more redundancies result in lower security, it gives you a way to protect your assets from loss and reduce risk.
The Bottom Line
Building and preserving your digital assets is a matter of managing the risks involved in the medium. Knowing the right steps into improving your digital wealth security should help give you peace of mind. Follow our tips above and it should help you keep your digital assets and investments safe until they’re ready for use.