Bitcoin reached the skies in the past year, with its value soaring nearly 1500% over the last 12 months. Bitcoin, which was a novel currency not so long ago, is one of the most precious value-storage devices in the world in 2018.
Increased value means greater interest and, often, greater risk. Bitcoin, at times, has been worth over $20,000 dollars. With that much value in a single token, Bitcoin theft is a growing concern. Bitcoin casinos features facts that suggest that once a Bitcoin is stolen or lost, recovery is impossible.
Additionally, as Bitcoin is a currency built and held online, theft or loss is possible in a wide variety of online hacks, scams and errors. As more and more people join the Bitcoin revolution and the investment potential continues soaring, it’s important to always secure and protect your BTC wallet.
Remember, as Bitcoin rises in value, the potential loss grows accordingly. For example, a few people have lost control of thousands of Bitcoin, mined in its earliest days when it was practically worthless. Today, that would be millions and tomorrow, that might be billions of USD worth of capital.
Here are 5 tips and best practices that will exponentially cut down the risks for your Bitcoin wallet, so you can protect your growing wealth this 2018.
Use a Paper or Hardware Wallet
The best way to prevent the loss of bitcoins from your wallet online is to have them offline.
That may sound easy enough, but most people still don’t take this small and inexpensive step of securing their cryptocurrency.
Bitcoin works as a public ledger system where you can always check the balance of any given BTC address, but the private keys are what give you access to transfer or make changes to that specific public ledger data. By taking those private keys offline, either by printing or writing them down, your Bitcoin becomes much more secure against a hack or spyware.
The cons to implementing a paper wallet system is that if the paper is destroyed, there is no way to recover your private keys, so multiple copies of the paper wallet should be stored in more than one secure location.
Hardware wallets are another great choice. A hardware wallet is a USB-connected device that stores and holds your wallets and private keys. The way these devices secure Bitcoin and other cryptocurrencies is by having a screen that is used to show any private key information and buttons to enter a pin when sending payments.
Thanks to these two features, a spyware hack would be unsuccessful, as without the hardware screen, a hacker with access to your computer would not be able to get the keys. Additionally, without your pin, no one could steal and use the hardware itself.
Both forms of offline wallets are far more secure than desktop or software wallets.
Never Leave Your Wallet Private Keys Open On Your Desktop
If you are using a software or computer-based wallet, a few important safety precautions should be taken to ensure your wallet is secure. First, never screenshot or send your private keys over the Internet. Second, never access the private key section of your wallet while connected to the internet. As a general rule, if you do need to write down or look at your private keys, disconnect your computer from the internet and then reconnect once you have navigated away from the private key pages. This avoids an attack by anyone using screen capture software of getting your private keys and accessing your Bitcoin.
Don’t Leave Excess on an Exchange
It can seem like a headache with relatively expensive fees to move your bitcoins to a secure wallet from an exchange. But the security of doing that can go a long way to protect your investment
Exchanges are constantly under attack and many exchanges are not as liquid as people assume. This means that in the event of an attack on the exchange, your bitcoin could be susceptible to loss. Additionally, in the event of the exchange losing solvency, your BTC wouldn’t be lost.
Bitcoin is not regulated and bitcoins found on your exchange account are actually completely in your control. As a general strategy, move all long-term holdings and larger value holdings off exchanges to personally controlled wallets as soon as possible
The only money on the exchange should be the money you are actively trading with or in short hold positions with.
Write Down Your Passphrase Somewhere Safe
Most of the wallets used to store and use Bitcoin and other digital currencies have a way of recovering them in the event of loss.
This is done with a multi-word passphrase that will ultimately get you back into your wallet in case you lose it and need to restore it to another device. It can get you in even if you forget your wallet password. As a general rule, ensure that you write down the phrase somewhere safe and in at least two different safe places just like you would with a paper wallet’s private key.
Remember that Bitcoin Transactions Cannot Be Undone
Another very good practice when using Bitcoin is to double or even triple check the amount and address when sending bitcoins to others. Bitcoin transactions can’t be undone and if you send an overpayment, it is impossible to recover the overage unless the person you’re sending to is willing to return it.
Additionally, in the event of sending to an incorrect address, it would be impossible to even get in touch with that address holder in order to reverse the payment. As a general rule to ensure you don’t lose your BTC to these common human errors, always double check the receiving address and amount you are sending. Typing in an additional zero in the wrong place can have a very negative impact on your crypto-finances.
Bitcoin, for all its shortcomings, is still highly stable and actually very safe to use. That being said, like every emerging technology there are those who will attempt to exploit its weaknesses.
These tips and practices are the best way to minimize those risks and protect your Bitcoin portfolio from hacks, loss and errors.
About the Author
Karthik Reddy is the community manager at Webmastersjury. He is also a travel blogger & writer, Location Incapable Internet Enthusiast and Re-Designer of the World Around.
Below is an infographic prepared by Reddy!