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Understanding how to back up your private keys is essential in keeping your crypto safe. Learn how to do so here.

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 give their users the freedom to transfer funds on a peer-to-peer basis, this is not without its potential problems. In most cases, the loss of access to your funds means the loss of the funds themselves, and the key aspect to avoid such a situation is the security of your private keys in a crypto wallet. In this guide, we will take a closer look at private keys and share some tips on properly utilizing them.

A private key is a core element of both symmetric and asymmetric types of cryptography. Don’t let the word “key” confuse you, though. The key is just a code used to scramble and unscramble the coded information, which is very important to provide the security of your data. Its role is even more important when applied to cryptocurrencies. 

The difference between these two ways of encrypting data is as follows:

Now, what does it all have to do with cryptocurrencies? The security of cryptocurrency wallet security is built on the principle of public and private keys, which combine to offer a method of encryption that doesn’t compromise confidentiality and the security of transactions. 

The public key represents a user’s address. It is known to any person who wants to send funds to the wallet’s owner, who needs the private key to access them. That is why ensuring that the private key is reliably protected is important. How it is protected depends largely on the wallet type.

When securely storing your digital funds, there are two basic types of wallets to choose from: 

. Hot wallets require an internet connection, which can make them potentially prone to hacking attacks. The main security problem with hot wallets is that the private keys are stored by a third party and can be accessed via the Internet. That is why, despite strenuous security measures being implemented, there is always a risk assets can be hacked when using a hot wallet. 

Cold wallets, on the contrary, are physical devices that don’t require an internet connection. Your funds will always be offline, making them much more secure than their hot alternatives. They are immune to hackers or computer viruses, and the private key is effectively protected by being generated and kept in an offline environment, away from the internet. From a private key safety perspective, cold wallets are a better solution.

When applied to cryptocurrencies controlled only by their owners (as opposed to being controlled by a third party on hot wallets), private keys play a crucial part in ensuring the safety of your assets. On the other hand, once lost, the private key cannot be recovered, making it impossible to withdraw the funds from the wallet. 

Backing up your private keys is crucial as one can never know when something goes wrong in relation to the device where your wallet is installed. Besides, you should always be prepared if your desktop, laptop, smartphone, or hard wallet device is lost, damaged, destroyed, or stolen. The good news is as long as the right measures are taken, you’ll still be able to restore your wallet on any device and your funds will not be locked away forever. 

Let’s review some basic ways of how this can be done.

Note that many types of wallets have unique interfaces, which can further complicate matters. You may try to find a backup option in the wallet settings yourself or search instructions in their online help section. On the whole, backups come in three basic forms:

The kind of backup a wallet generates depends on the type of wallet that you use. For example, Trezor and Ledger, the most popular hardware wallets, generate private and public keys via BIP39 mnemonic phrases of 24 words as a seed.

Once the backup is created, the next step is to decide how to store it. There are a few options of how this can be done:

All these methods are acceptable for making your backups. It may come down to personal preference. 

Things to Avoid With Your Private Key Backups

A Few Tips on How to Create a Safe Environment for Your Private Keys

Managing cryptocurrencies isn’t easy, but you can take some steps from the very beginning to protect the private key from many dangers: 

Common sense is paramount for the safety of your cryptocurrency. Your private keys are completely your responsibility. Cryptocurrencies don’t provide a helpline to call — remember, you are essentially your own bank. 

Taking care of your crypto funds’ security may seem complicated. But once you get a hold of all the principles that can help you avoid the loss of your funds, you will go on to fully appreciate the benefits of cryptocurrency and the benefits of keeping them safe. 

How to Backup Your Private Keys

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