When registering a cryptocurrency wallet, a user receives two keys: a private and a public one. The second one is an account number, which is necessary for exchanging digital coins with other users (it can be published). The private key is a kind of PIN, which is a direct key to the wallet. Its loss often leads to the loss of full access to cryptocurrency.
Therefore, users often have a question about where it is more advantageous to store private keys. Here are the options:
• On paper (physical media);
• Cloud storage (a service that provides access to the key from a connected device);
• Desktop storage;
• Hardware storage (on a special encoder).
Cloud Storage Security
The most convenient way is cloud storage. The question on the choice of the source of secret key storage became particularly relevant and essential after a number of cryptocurrency exchanges had encountered hacker attacks. Cloud services have a direct drawback – they are encrypted with a password. And to gain access to them, it is necessary to memorize a new password, which is often not changed by the user in different sources. The same password is used for both e-mail and cloud service. This significantly increases the risk of hacking (by about 40%, according to official data).
An additional factor is the risk of losing a mobile device, laptop. Cloud services may not require identification when you log in and authorize frequently. Therefore, there is a risk that the loss of a device with data will lead to opening data and receiving access to information by unscrupulous individuals. In this case, it is worth using not just simple cloud services. For example, the American cryptocurrency exchange Coinbase integrated cloud storage of keys.
Due to this feature, each user with an account on the exchange can store a private key with access from any device. According to representatives of the exchange, the cloud has several levels of encryption, that protects it from hacking. Experienced users and IT-specialists do not recommend using iCloud, DropBox, Google Drive to store private passwords. Access to cloud services can also be provided through e-mail. You can bind a mobile phone number to your account.
Alternative to cloud storage of private keys
The most effective alternative to the foregoing methods of storing private keys is a hardware device. It is rational if you have a cryptocurrency in the total amount of $ 5000. Then the purchase of a special flash drive with multiple levels of encryption will be justified. But the password to the service will also have to be stored somewhere.
Cryptocurrency owners try to improve the security of private data, but they may fail, being hacked or losing their password from a cloud service.