We believe that you are about to read this piece because you just launched a Bitcoin (BTC) wallet. Congratulations! You are welcome to the amazing world of digital currency. That said, as you navigate your way through the crypto space, Cryptoblockwire will continuously guide you through the uncharted waters. Indeed, in keeping with this responsibility, we would like to broach the topic of wallet security. So, fasten your seat belt as we embark upon this journey together.
Understanding a Bitcoin Wallet
Just before we talk about the rules, it’s important you understand what a Bitcoin wallet is. A Bitcoin wallet is a digital wallet that enables you to hold your Bitcoin. You cannot just keep your BTC anywhere, so the wallet serves that purpose. Also, BTC wallets come with private keys that you shouldn’t reveal to anyone. Don’t say you weren’t told! In addition, wallets have many different types: software wallets, online wallets, hardware wallets and electronic wallets. Nonetheless, you may be wondering, “Why do I need to secure my wallet?” Let’s discuss why you should secure your wallet.
Protecting your Bitcoin Wallet
There are a number of methods that cybercriminals use to defraud Bitcoin wallet holders. Alright, let’s break them down one after another.
Indeed, con artists don’t just defraud people of their fiat currencies; they also dupe people of their hard-earned cryptocurrencies. As the world is going digital, they go digital alongside it. So, you must pay attention to illicit phishing, passwords for your devices, cryptographic keys, and fake cryptocurrencies (yes, fake virtual currencies exist!)
2. Old Password Backups
You see, hackers make unauthorized incursions into your accounts using old backup recovery. When they create a recovery program, your frequent change of password doesn’t mean a thing. Yes, this is another method they use to empty people’s wallets.
3. 51% Attack
Hi friend, you shouldn’t worry so much about this. Just keep in mind that it happened during a phase of Bitcoin’s development. It means an attacker having more coins than the developer. That’s a disaster!
4. Sybil Attack
Wondering what Sybil attack means? Okay, worry no more. Sybil attack happens when a cybercriminal blocks users from performing their transactions as they try to take over the network. Similar to the Sybil attack is the Denial-of-Service (DoS) attack, where an attacker strikes for the purpose of stealing coins. However, DoS attacks usually happen to wallets that exchanges maintain. Yes, they strike on a massive scale!
There you have them; those are the most common kinds of attacks that your wallet is exposed to. However, there is a way out!
Keeping Your Bitcoin Wallet Secure
Now, the mind-boggling question will be how to secure your wallet from cyber attacks. Sure, that is the essence of this piece. So, let’s break them down in these 5 Important Rules for Keeping your Bitcoin Wallet Secure.
1. Offline Mode or Hardware Wallet Storage
First of all, offline mode is one of the ways you can keep your Bitcoin wallet away from the prying eyes of cybercriminals. Offline mode, or cold storage, means moving your bitcoins to a location without internet connection. Indeed, nothing feels better than coing not being prone to hacking anymore. This method is similar to transferring files between two computers without internet connection. Nonetheless, you are strongly advised not to hold all your bitcoins in this mode. Yes, the best bet is to divide your coins into two portions. While you store some in the cold storage, keep the rest online. Catch the drift? Great!
2. Create a Wallet Backup
Also, to stay on the safe side, you need to create a backup for your wallet. Surely, backups guard your wallet against human errors and computer failures. It is noteworthy that it is similar to moving your bitcoins to cold storage. So, creating a wallet backup comes in as Rule 2. Now, let’s check out Rule 3 together.
3. Wallet Encryption
Here we are. Apart from the two rules we have already discussed, encrypting your wallet is another rule to provide strong protection. Truly, it enhances your wallet security. When you passphrase your wallet, you are giving hackers a lot of hard work to do. Sure, this is the type that will leave many of them frustrated. This makes perfect sense when you use a laptop or mobile device for Bitcoin trading.
4. Password Management
You see, you must learn how to manage your password. Make no mistakes about it, providing a strong password is very important in the quest to secure your Bitcoin wallet. You should come up with a password you can’t memorize. What’s more? Endeavor to include everything while creating a password: from alphabets to caps, numbers to special characters. However, writing your password in your diary or anywhere else for that matter is a no-no! More importantly, you should change your password from time to time. While you’re at it, use passwords that you can commit to memory effortlessly.
5. Two Factor Authentification (2FA)
Ever heard of two-factor authentification before? Well, it rocks! Yes, it’s one of those advanced security settings you hate to like. Hello, take that hate elsewhere, and secure your funds. Let’s be clear, you shouldn’t have any business whatsoever with an exchange that doesn’t provide this service. Wondering how 2FA works? Well, it works in two ways. The first is the use of Google authentication. Here, you have six-digit numbers that keep changing all the time. The good news is that you know the digits. Secondly, there’s biometrics. Yes, you use your fingerprint to gain access to your Bitcoin wallet. In some other cases, exchanges will send a text message to your mobile phone before you can log into your dashboard. Therefore, you must enable 2FA on your Bitcoin wallet.
Indeed, there are a bunch of steps you can take to secure your Bitcoin wallet from cyber incursion. But the “rules” we have explained are some of the most crucial of them all. If you are new in the crypto-sphere, just know you have potentially high prospects of making quick bank. To achieve that, you have some hurdles to overcome. Unarguably, the biggest of them all is cybercriminals. They aren’t merely IT savvy; cybercriminals also stay up all night long, hoping to devise a means to empty your Bitcoin wallet. Not to worry though, as we don’t want to scare you. All you need to keep your Bitcoin secure is follow the rules we stipulated in this piece. Give a try now, and you will be so glad you did!
This article should not be taken as, and is not intended to provide, investment advice. Users are ultimately responsible for the investment decisions he/she/it makes based on this information. It is your responsibility to review, analyze and verify any content/information before relying on them. Trading is a highly risky activity. Do consult your financial adviser before making any decision. Please conduct your thorough research before investing in any cryptocurrency and read our full disclaimer.