We all agree that the best way to secure your crypto assets is to have them in a wallet that you control and not on a centralised platform.
Furthermore, it’s always advised to store them in cold wallets like hardware or paper wallets that are never or not always connected to the internet, especially for coins you plan to HODL (hold) long term.
Regardless of what self-custody option you choose, where and how you store the private keys to your wallets is most critical to the safety of your coins.
In this post, I will be sharing with you the various ways you can store the private keys to your crypto assets and their associated risks with recommendations on how to mitigate them.
What are private keys or secret recovery phrases?
Your private keys or secret recovery phrases are secure codes that grant anyone access to your coins or tokens on a blockchain.
Anyone with your private keys or recovery can access your funds from anywhere and at any time with or without your consent.
In fact, they work like bearer cheques. Whoever has them, has unhindered access to your coins.
The private key is a long string of unintelligible code that looks something like this: MIIBVAIBADANBgkqhkiG9w0BAQEFAASCAT4wggE6AgEAAkEAqPfgaTEWEP3S9w0t.
Your seed or secret recovery phrase, however, is a sequence of 12 to 25 words that you can use to recover your funds to a new device or wallet.
Both the private key and recovery phrase grants anyone who has them full access to your coins.
5 ways to store your private keys and secure your crypto
Below, we discuss the various ways to store the private keys to your crypto, their associated risks and steps you can take to mitigate the risks.
1. Write them down
The most popular way to secure your private key or seed phrase is to write them down somewhere and keep it among your most important belongings.
The major risk with this method is that someone could see them, you could lose the paper or diary you wrote it on, and it could be stolen, or burnt in a fire accident.
You can attempt to mitigate these risks by writing them down on a piece of paper and keeping it in a safe deposit box in your house or at the bank etc.
If you keep it in a safe deposit box in your house, you need to make sure you remember the password to the safe and also prevent others from finding out and breaking in.
If it sounds like a lot of trouble, that’s because it is.
2. Save it in an excel sheet or notepad on your device
You’re always encouraged not to store your keys on an electronic device as they can be hacked or compromised one way or another, especially if you hold significant amounts.
I believe that you can choose the method that you believe is most suitable for you.
You can store your private keys or seed phrases in an excel sheet or notepad on your PC, phone, or even in Google Docs.
Then proceed to protect the file with a strong password or encryption key that only you know and can easily remember.
However, note that if you forget the password, lost the encryption key or mistakenly and irrecoverably delete the file you’ll likely lose your coins.
3. Back it up in the cloud
I have seen that some wallets like the Bitcoin.com and Coinbase wallets allow you to seamlessly back up your private keys to the cloud.
This way, you can easily restore them to a new device in case you lose your old one or access them from anywhere in the world.
Your assets will only be as safe for as long as the cloud storage service provider is not hacked or compromised.
Again, if you’re dealing with a significant amount or you’re a public figure, this could be a bad idea as you may be a prime target for scammers.
4. Store it in your email
Some people store their private keys and seed phrases in their emails by keeping them in a draft or mailing it to themselves.
This way, whenever they need to recover their funds to a new device or wallet, all they need to do is log in to email and copy the recovery keys.
This feels so convenient until someone gains unauthorised access to your email and steals your private key and coins.
If for any reason you must use this method, then you must use an email that nobody knows about and that you don’t use for anything else.
Then pray that a rogue employee of the email service provider or hacker does not break into your email and steal your recovery phrase and coins.
5. Memorise them
Probably the most radical and safest way to store the keys to your crypto assets is to memorise them.
But if you die prematurely or suffer an accident or sickness that causes memory loss, your coins will be gone forever.
If that’s a risk you’re willing to take, then by all means go for it.
Which is the best way to store your private keys or recovery phrases
For me, the best way to store your private key or secret recovery phrase in your crypto assets is to write them down somewhere safe.
You understand the circumstances around you and your environment better than anyone.
Therefore, whether you keep the diary or paper you wrote them on among your most important belongings, in a safe, or in a commercial deposit box is up to you to decide.
The suggested way to store your private keys or recovery phrases
The most popular way to store your private key is to write it down on paper and keep it in a safe place among your most precious belongings or in a safe deposit box at a bank.
If your wallet holds significant amounts, then by all means safe deposit boxes are worth considering for keeping your private keys.
But if the amount is too small to be worth renting a safe deposit box, then storing it among your most precious belongings is the next best move.
And of course, these are just suggestions, you can come up with your own creative way of storing your private keys that you’re confident will not be compromised or lost.
Securing the keys to your crypto assets is an important responsibility for all crypto investors or users.
If you decide to store your keys by yourself, we have discussed the 5 most popular ways to secure them above.
However, if you feel the trouble of self-custody is too much for you, you may opt to store your crypto on centralised exchanges like Binance and Coinbase and hope that they don’t go bankrupt.
How do you secure your private keys or secret recovery phrase to your crypto assets? Share with us in the comments section below.