Anyone riding the cryptocurrency wave is likely enjoying once-in – a-lifetime returns. But the longterm benefits of those returns are dependent on the way you manage your crypto portfolio. Where and how are you managing it?
Investing in cryptocurrencies is not as easy as buying stock in an existing brokerage account. One day this will change, but in the meantime, you have to do some extra work and guide yourself into safe, smart cryptocurrency investing. Identical crypto portfolios may not necessarily have the same current or future value when
Viewed through the lens of security. Some people choose to be 100 percent responsible for their own crypto assets, while others let someone else take responsibility. Decisions about who secures your cryptocurrencies and how will ultimately dictate how valuable those assets will be. A less secure portfolio has a higher risk of loss and is. therefore, less valuable.
To give you a better sense of how to protect your crypto assets and make sure that your portfolio will be as valuable as possible, here are five habits that ensure optimum cryptocurrency security.
CPA, CMA, CFE, СВР
ABOUT THE AUTHOR
Kirk Phillips is an entrepreneur, a Certified Public Accountant (CPA) and a Certified Bitcoin Professional (CBP) obsessed with Bitcoin as a tool to cisrupt existing business models and transform accounting. Author of The Ultimate Bitcoin Business Guide, an inspirational reference for entrepreneurs and small- to medium-sized businesses, he weaves risk management into business process outsourcing, crypto-business consulting and education. He can be reached at TheBitcoinCRA. com.
Using a password manager like LastPass to blend ease of use and security for accessing and using cryptocurrency exchanges, online wallets and other platforms is critical. Buying cryptocurrency on an exchange and sending it to a wallet could require simultaneously using two. three or even more platforms at the same time. A password manager is the only way to do this with speed and efficiency.
Keep an inventory or a master list of all of your exchanges, wallets and coins. A simple portfolio, for instance, would be a Coinbase account with ether, bitcoin and litecoin. However, someone with 67 coins who uses 11 exchanges and 23 wallets has a more complex crypto portfolio. What happens if you back up your passphrases and always follow best practices but forget you actually own a coin or the wallet where its stored? This can happen faster than you think as your portfolio grows more complex. A master inventory list works as a cross-check with your portfolio apps which may not provide that level of detail.
PROPERLY MANAGE MULTIPLE EXCHANGES
While it may seem overwhelming at first, its a good practice to create multiple exchange accounts even if you arent ready to make a trade on every platform (see page 74). Youll naturally find that the more cryptocurrencies you invest in. the more exchanges youll need to be on. because not all coins are listed on all exchanges. Even though crypto should never be held on an exchange, many people still do this for multiple reasons. Sometimes a desktop wallet isnt stable or reliable yet. or it may be the only choice outside of an exchange, therefore an exchange may be the second-best storage option for security diversification. Also, think about which exchanges you trust more than others when using them for storage.
The ultimate backup for PINs, passwords, private keys and recovery phrases is offline, through paper wallets, recovery phrase cards and stainless steel or titanium storage options. If its offline, then it has to be physical, which means it has to be securely stashed away. Buy a high-quality, fireproof safe heavy enough to make theft impractical and/or bolt it to a wall. Then duplicate every backup in your home or office safe and store it in a bank safe deposit box. The cold-storage backup in your safe is a backup to the safe deposit box and vice versa. If your safe is stolen or otherwise lost to catastrophe, then the safe deposit box is your backup plan. Conversely, if the bank seizes or freezes access to your safe deposit box. then your safe is your backup plan. It is. admittedly, ironic to use a bank for crypto storage, but there is no safer third-party storage for the cost.