Bitcoin, a decentralized cryptocurrency that allows the users to transact directly from peer to peer network, without the involvement of any third party such as a bank. No single person or institution controls it.
Cryptocurrency, like Bitcoin, feels secure due to its features such as decentralization, anonymous transactions, and validation on the ledger. Yet such steps do not render Bitcoin cryptocurrency less vulnerable to easy scams that defaulters are waiting for on any other location. As bitcoin’s popularity and the valuation has gradually increased every day, so do the increase of cyberattacks on Bitcoin wallet and exchanges.
Why do you need to protect your Bitcoin?
The government does not control Bitcoin exchanges, and they usually do not provide adequate protection or insurance as they do provide to the banks to store money.
Every Bitcoin owner has a set of private keys to access their Bitcoin wallet; without these keys, the owner can’t access the cryptocurrency. What if you lost your Bitcoin private key and got stolen, then what happens? You could end up losing all your money by computer malfunction or by hacking.
Therefore it is vital to secure your Bitcoin wallet to avoid losing your money. However, through a few simple measures and adopting good practices, you can secure your Bitcoin.
How to protect your bitcoin?
Caution with Web Wallets
In the past, there were several cases surfaced about the hacking or the security breaches of the web wallets. Being convenient, one might choose to store their money on these web wallets, but one should be cautious before saving the money. These online services do not provide adequate security as we do have in banks for storing our money. It is recommended to use a two-factor authentication system to avoid such a breach because if you lose your money, it can’t be refunded.
Use small amounts for everyday purpose
Like in everyday lifestyle, you do not prefer to have a large amount of money (in cash) in your wallet, the same goes for the Bitcoin wallet. You keep a small amount in your wallet and keep the rest of the money in a secure place. Therefore, it is recommended to use a separate wallet for everyday use and the rest of the Bitcoin in a safer and secure environment. Keeping different wallets is a good practice to avoid fraud or hacking.
Create a Backup
Creating a backup of your wallet is the easiest way to protect your wallet from any theft. You need to backup your wallet regularly as this can protect you even if your computer gets crashed. You can recover your wallet from this backup. If you lose your wallet and does not have its backup, it can be crashed or hacked, and unlike a credit card, you cannot ask for any refund in case of fraud. Hence, you will end up losing money. Keep your backup in multiple locations like hard drive, USB, CD, etc.
Encryption of your wallet
Encryption provides you with an additional layer of security to your wallet, and only those people can access the wallet who knows the correct key. It is the same as you do with your smartphones by encrypting with a strong password. Encryption means that you will need a password to open the Bitcoin wallet. In situations where devices like computers or smartphones are used, encryption becomes much more essential to defend against online theft.
Separate offline wallet for savings
The most popular term in securing a Bitcoin wallet is “cold storage”. It is an offline wallet which provides the security of the highest degree for savings. This wallet is not linked to any online network, which makes it a secure environment for your savings. It also protects you from computer vulnerabilities like crashing and hacking.
Update your software
By updating your Bitcoin wallet with the latest version, it will provide you with more features related to the security fixes and offer more stability than the previous versions. The update of other software or applications on your computer or smartphone prevent any severity and provide a safer environment.
Bitcoin has a multi-signature function that enables a transaction to include several separate approvals. For example, in the banking system, they grant access to their treasury to several employees but allow withdrawal only in the presence of 3 or more.
The only person solely liable for the protection of your Bitcoin wallet is you. With the gradual rise in the popularity of cryptocurrency, several protection measures are being developed for a safer environment. You need to stay up-to-date with the new software updates and security improvements to protect your Bitcoin wallet away from any theft.