In the world of cryptocurrencies, whoever holds the private keys owns the asset. This means that the private keys are far more important than regular passwords are, even in this modern world. But even in this digital age, there are some things that are best kept out of the reach of hackers. Private keys are one of those things.
It is recommended that your either record your private key by hand or have it stored on a device that isn’t connected to the internet. This can be anything from a smartphone that you don’t use as anymore, an external hard drive or a memory card. Though some other sites recommend using a USB flash drive, these aren’t a good idea as they aren’t designed to be used for long term storage.
By keeping your private key stored offline, you keep it out of the hands of hackers and can keep your cryptocurrency safe. If you do write the private key down on a piece of paper, put it somewhere safe, so it doesn’t get thrown out accidentally.
If you lose your private key, then you are pretty much out of luck as once they are lost, they are lost forever. Recently it was estimated by a digital forensics firm that around four million Bitcoins have been lost and are gone forever, so you’ll want to keep your private key safe as it’s a very sad statistic that you don’t want to become part of.
Though there are some promising emerging technological solutions to help you recover a lost private key, the best defence against losing your private key is taking care of it properly.
Saving your private keys
As we said before, the best defence against losing your private key is storing it properly. If you have any amount of cryptocurrency, you’ll want a cold storage wallet, but a cold storage private key too. Choose what you are going to use for cold storage wisely as it is not unheard of for people to lose not only their private keys, but their cryptocurrency because a hard drive has been thrown out or a USB flash drive has failed.
The best thing to do is to cold store your wallet and private key on a device, then store the device in either a fireproof box in a safe or keep it in a safety deposit box. This may sound like overkill, but if you had £500,000 in cash, would you leave it lying about your house or would you lock it away in a safe or a bank? That’s how you need to consider your cryptocurrency.
If you have your private key written on a piece of paper, then you’ll want to keep that piece of paper at the very least in a locked drawer, if not in a fireproof box. If you do have a written copy of your private key, it might be worth keeping a copy of it in your home and another copy of it in a safety deposit box.
Want to learn more about private keys and cryptocurrency security, read our guide.