My guide to securing digital currencies

This is my work-in-progress guide and self-adopted steps to backing up and keeping my digital currencies secure. The guide applies to bitcoins, litecoins, and ripples (or XRP). It’s widely accepted that due to the popularity of Windows that it’s more vulnerable to attacks and malicious software. Therefore I use Linux as much as possible when handling digital currencies. I use numerous wallet providers, both web-based and installed applications. A key factor in keeping your assets secure is that you are the only one with access to your wallet files, seed phrases and passwords. Therefore I prefer to use an installed wallet application, at least for accounts with larger balances.

The services I use are Electrum, Litecoin-Qt and the Ripple online client, and I will therefore focus on preventing unwanted access, backing up files and making sure that I can restore and gain access to my assets held by these services should I need to.

Electrum

The electrum wallet can be recovered from a secret seed so it’s imperative to keep backups of this seed and prevent anyone from seeing it. I keep a copy of the seed in three locations:

1. Paper copy kept at a safe location
2. In my Wuala account. Before uploading I self-encrypted the file
3. File saved on a USB-stick, also self-encrypted

Litecoin

My Litecoin-Qt wallet is encrypted and I keep the passphrase on paper at a safe location.  A self-encrypted file with the passphrase is saved in my Wuala account and on a USB-stick. The wallet.dat is backed up when I see it as necessary. By default the wallet file contains 100 pre-generated unused addresses, so after a period with many new transactions I make a new backup and replace the wallet.dat file in my Wuala account and USB-stick. Also this file is self-encrypted.

Ripple

For my ripple wallet I backup two files. One file with my secret key is kept in an encrypted file on Wuala and on a USB-stick. This backup only needs to be performed once. My wallet file is also self-encrypted and stored in my Wuala account. The wallet file contains stored contacts so I replace it when I see it necessary.

The Final Touch

There are some password that I keep in my head and written down for easy access

•  Electrum password
• Litecoin-qt passphrase
• Ripple client wallet name and passphrase
• Wuala account name and password
• 7-zip password for my self-encrypted files

Take note that for assets of larger value, savings for example, this is not a recommended approach as the wallets are in contact with the internet and therefore may be compromised or stolen if someone unwanted can gain access to the seed or password. I make transactions, even though not very often, with these wallets and therefore I require them to be online. Cold-storage, i.e. creating a wallet which is never in contact with the internet, is another topic and requires different set of actions.