It started out as a small network with each bitcoin less than 10 cents but now one bitcoin is worth thousands of dollars. The reason behind bitcoin’s rise is its ability to secure transaction effectively and provide an alternative decentralized way of storing and transferring money regardless of borders, governmental procedures and what not. While bitcoin continue to make giant strides in money matters, it is important to know that the safety of your bitcoin and private keys is of paramount importance.
It is because bitcoin is not like a regular currency that may be tracked by the government and law enforcement agencies. Once a bitcoin is stolen, there is very little chance that you will get it back, perhaps impossible. It is because bitcoin transactions are anonymous and those who steal bitcoins always transfer bitcoin through anonymous channels, leaving nothing behind. So, it is very important for us to take the safety of our bitcoin seriously.
Here are five ways through which you can keep your bitcoin safe and secure. They include security for both short-term and long-term savings in bitcoins.
Enable Two-factor Authentication
Security of your favorite trading platform or wallet is of paramount importance. You don’t want anybody snooping around with brute force to test the strength of your password. It is proven that no matter how long and difficult a password is, it will eventually crack if someone wants to get in.
For most people with eight nine character passwords, it literally takes minutes for your password to be cracked. So, you need to be able to attach something else with your account who possession is tied to your identity and that is your cell phone’s number. This is an example of two-factor authentication and is a really important and elementary way to keep your altcoin account safe on wallets or crypto websites.
Almost all bitcoin exchange or wallet offer two-factor authentication. You need to have your mobile around you to sign into your account and you can enable the authentication very easily. Just go into your exchange or wallet’s settings and select Account security option. From there you can select two-factor authentication.
Be careful of selecting your mobile. It is advised that you setup your account with two-step authentication as soon as possible. It is the basic layer of defense that everybody should have in their account.
Use Hardware Wallets or other forms of Cold Storage
It is also advisable to keep your long-term savings in bitcoin away from online servers and wallets. You need to understand that no matter how much a company claims they are secure, there is still a chance of a breach with an online server.
If done right, bitcoins in cold storage are unhackable. In basic terms, cold storage means that bitcoins are to be taken away from servers and stored on actual hardware that is not connected to the internet at all. Since it isn’t connected to internet at all, there are no chances of it being snooped away from you in a flash. All you need to do is to keep that hardware wallet safe and sound and your bitcoins are safe.
There are commercial products that can act as cold storage but you can use them momentarily and then they continue being cold storages. They are called hardware wallets and have now become quite popular as safe storage of bitcoins. Trezor and Ledger Nano are two most popular hardware wallets. They combine the concepts of web wallets and cold storages really well.
Alternatively, you can also use a paper wallet to store your private keys. It is as safe as a hardware wallet but not as useful. But, once you have saved the bitcoin in your hardware wallets you have to know that it is the only record of the bitcoin left in the world. If you were to lose it, you will lose your entire money for good in a flash.
Never Keep your Savings on an Exchange
You have to remember the fact there is always a first time for something. Even big exchanges are susceptible to being hacked and the bigger they are the bigger their heist is. Don’t think for one moment that Coinbase is such a secure exchange I don’t need to take my bitcoins and even other cryptocurrencies away from the platform. You always need to mitigate your risks and the altcoin exchanges are the biggest source of leaked bitcoins.
Their user database even if heavily encrypted and kept offline is susceptible since its not you who is guarding its access but some other guy who has no idea how much valuable your coins are.
So, never keep your savings online. Maintain three storage areas for your bitcoin. First of course is your bitcoin exchange. Only keep bitcoins here for the day trading purposes and not more.
The next is your stand-alone wallet like electrum wallet or any other good wallet. You will need to keep your intermediate amount of savings as it is much safer than the exchange.
But, if you have a significant number of bitcoin you need to store them in bulk offline in the form of cold storage. Why most number of bitcoins and their private keys here? The reason is that this space is unhackable because it is offline and off the grid. It is in a safe space where even wallet hacks and exchange heists can’t affect your long-term earnings.
Use Strong Passwords
Strong passwords are the cornerstones of your bitcoin’s safety. You need to be able to keep strong passwords not just on your coin wallet or your exchange account but also your email addresses and phones themselves. We often have an exchange app on our phones and we simply cannot hope to have a better outcome if someone steals your phone and you can’t disable it one time. While two-factor authentication makes it even more safer, try combining them with a strong password to complete your security A game.
So, it is time to get rid of all the bad passwords starting from your email address’s itself. Your password should be at least 16 characters long and should include upper case, lower case letters and symbols. Don’t think of an absurd password because passwords can be extremely difficult to remember.
Think of them like pass phrases like Sh!tiLockedMyCarOnceAgain.
It is easy enough to remember but extremely difficult for brute force to power through.
Double check your transactions
Entering wrong receiving/sending addresses happens to many people even the most experienced cryptocurrency traders and buffs. The reason is that nobody thinks of it a serious matter before it actually happens to the guy. Since we copy paste the long public addresses, it is easy to see that it happens.
We never confirm the whole address. We just tally a little bit especially if we are experienced and then click send. It is only when the money is halfway across that we understand what a blunder we have made but by then you can’t do anything. So, what to do in order to stop this from happening.
We understand that in the crypto world, there are a lot of transactions for people to handle and it becomes cumbersome but one thing you absolutely need to do is to make a table in excel and detail each person with his public address(es). It is extremely important that you do so because mixing up addresses is not a new thing at all. It happens and you need to beware of it.
By clearly listing people with their public addresses, you can double check your transactions extremely easily. Most wallets only show the public addresses and there is no option to name the recipient so as far as wallets go, you can’t name people so you need to maintain a separate excel file with all the details.
With a careful approach, you can store your bitcoins safe and secure. Keeping most of the bitcoins away from servers in a cold storage is the maximum security level that you need for your storage. To keep the bitcoins in your wallets and exchanges safe, you need to enact two-factor authentications, employ useful and long passwords and double check your transactions.