How Do You Keep Your Bitcoin Safe And Secure?
In recent years, money has begun to change forms. All forms of money are physically different, but they are all backed by government institutions. In 2009 that all changed when Bitcoin was created. This innovative digital currency is taking the world by storm and changing how we exchange money. This completely new currency has no “physical form” and is not controlled by any one central bank or government entity. Since its inception in 2009, this virtual currency has gained users and value. According to reports, there are over 16.7 million Bitcoins in circulation with a market capitalization of around 260 billion dollars. Everyday, nearly 300,000 Bitcoin transactions are made.
With this increase in use and value, its not wonder that people are worried about possible hacks and/or theft. Since Bitcoin is not a tangible currency, people need to know how to store their money safely and securely. One of the ways that people are keeping their bitcoins safe is through a digital wallet. Just as you would keep money in your wallet, the same idea is used for digital wallets. Digital wallets are web or hardware based wallets that can be downloaded onto a desktop, laptop, tablet, or mobile device. Another way to keep your wallet safe from theft is by printing out your “Private Key” on a piece of paper (paper wallet) and storing it somewhere safe.
How Safe Are Digital Wallets?
Before you start using digital wallets to store your bitcoins, it is vital to understand the safety and security aspects of the digital wallet properly. The safety and security of a digital wallet depends greatly on how the user manages the digital wallet. Every single wallet contains a set of private keys that allow the owner and only the owner, to access and use their wallet. The main issue that people worry about with digital wallets is the chance of losing their Private Key, either by theft or accident.. If you don’t have your private key, you won’t be able make transactions or see your bitcoins again. A user can also lose bitcoins because of computer malfunctions, being hacked, or losing the computer where the digital wallet was downloaded. Here are some tips to help you avoid these issues.
Securing Bitcoin by Offline Mode is a popular option and is also known as “cold storage”. These wallets are not connected to the internet and therefore, have less of a chance of getting lost due to hacking. However, accessing cold storage does have it drawbacks.. It can be inconvenient to use, the best option is to split your bitcoins between cold storage and an online digital wallet for regular transactions. Kind of like having a checking account and savings account, but they aren’t connected. Some popular cold storage methods include
- Sound Wallets
- Paper Wallets
- Hardware Wallets
- Storage Devices like a USB device
Backing up your entire Bitcoin wallet is regularly is important to the safety of your bitcoins. If your computer was to fail, your regular backup may help you to recover your digital wallet. Always remember to backup all wallet.dat files and store it on multiple locations like a hard drive, USB, or CD. And don’t forget to use a strong password to backup.
Keeping your software updated is vital to your bitcoins security. Wallets that are running on out of date software are always a soft target for hackers. The latest version of wallet software will have a better security system and increase the safety of your bitcoins.
Encryption adds a new layer of security to files, folder,s or messages. Encryption can only be unlocked by individuals who know the correct key. For desktop, hardware, or mobile wallets, using encryption to protect your bitcoins will help protect you from online rogues.
The Bottom Line
As long as you are smart about keeping our Bitcoin wallet safe, the above mentioned safety features can help you to stop hacking, fraud, and theft cases.