Cryptocurrencies are heating up for investors seeking to try something new in their retirement accounts.
Yet, newer investors may be concerned about how to keep their investments safe from hackers and thieves. The security of a cryptocurrency account often depends on how it is stored and the amount of protection behind the chosen storage method. So, how does cryptocurrency security work?
Because they are digital assets, investors can’t hold cryptocurrency in their hands as they can stock notes or precious metals—they’re not tangible. In this manner, exchanging cryptocurrencies is similar to using a banking card in which money is electronically spent. On the other hand, unlike a banking card, every bit and byte of cryptocurrency has a ledger that follows it. Spending and exchanging are recorded on the blockchain the crypto was built on, so a permanent history is attached to each asset as it moves from one user to another.
While the transactional log alone does not protect your account from hackers, it may make it more difficult for hackers to steal cryptocurrencies. After reading through stories about cryptocurrency theft, investors may learn that most thefts are inside jobs or due to serious security flaws on the account provider’s side.
How to Secure Your Cryptocurrency
Average cryptocurrency investors may opt for one of two kinds of “wallets” to store their cryptocurrency: a hot wallet or a cold wallet. A hot wallet is connected through a cloud infrastructure online and may require multiple security options through an investor’s chosen portal. A cold wallet is a hardware device that may look similar to a USB drive and stores the cryptocurrency blockchain offline.
Investors who choose to use hot wallet storage may elect to utilize the public key to put funds into the wallet and then the private key to spend the cryptocurrency. Using an offline storage method gives investors complete control of when others access the keys. While there may not be a single, most-secure cryptocurrency, online account providers have a variety of ways to protect private keys.
To keep your wallet safe, choose an account provider that offers:
- A cold storage wallet
- Enhanced private key storage
- Two-way authentication
Some investors may decide to make a backup of a private key in case it gets lost.
How to Secure Cryptocurrency in an IRA?
Investors who elect to invest in cryptocurrency in their IRA accounts may still need to select a hot or cold wallet. Unlike traditional crypto investors, retirement fund cryptocurrency investors do so through a custodian. The custodian may help you choose between hot and cold wallet options.
Other ways to keep your wallet safe include:
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Safely Investing Retirement Funds in Bitcoin
Bitcoin IRA is the first and leading self-directed IRA platform that provides users with the opportunity to invest in over 60 different cryptocurrencies across all 50 states. Available via a web browser and convenient and user-friendly mobile app, the Bitcoin IRA platform connects users with a qualified custodian, digital wallets and cryptocurrency exchanges. Offering world-class security1 with 100% offline, cold storage and multi-signature wallets, Bitcoin IRA is seen as a safe choice by over 100,000 users.
BitcoinIRA carefully chooses cryptocurrency assets before offering them to customers and utilizes some of today’s safest wallets.
Experience the Bitcoin IRA2 difference for yourself when it comes to diversifying your retirement holdings.
1Security may vary based on asset chosen and custody solution available.
Questions on getting started with cryptocurrency investing in your Bitcoin IRA account? Our specialists are here to help! Call us at 877-936-7175 or email us today.
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