The Bitcoin protocol itself offers high levels of security, but anyone interested in buying, selling, or using bitcoin should take steps to ensure that their bitcoins remain safe and protected. Here is our list of the top ways you can guard yourself against theft, loss, and fraud.
1. Use a trusted bitcoin wallet
There are five basic types of wallets — hardware, desktop, web-based, mobile, and paper — and each comes with their own advantages and disadvantages. Hardware and paper have the advantage of storing your bitcoins apart from any network connections, keeping them safe from hackers and malware, but spending them requires transferring them to a “hot” or internet enabled, wallet.
Web-based, mobile, and desktop offer ease of access to online vendors, but leaves your private key information vulnerable to a range of attacks. That being said, many of these services have security measures in place to make sure no one gains access to your bitcoins. To check out our list of trusted wallets, read this post.
2. Store most of your bitcoins offline
Woodwallet hardware Bitcoin wallet
This is akin to storing most of your money in a bank, instead of walking around with it. While many web-based services are stepping up security, no software is perfect, and the best way to avoid attacks from hackers is to keep small amounts of bitcoin online for convenient spending, and the rest in a hardware, paper, or security tailored desktop wallets (Armory is one example of this).
3. Back up the files from your wallets
It is highly recommended that your regularly back up the wallet.dat files from any wallets you are using to guard against any hardware or software failures that may lose your private keys. Remember, your private key is what gives you exclusive access to your bitcoin balance; if that key is lost, so are your bitcoins. To see a detailed guide for how to back up your bitcoins, check out this page.
4. Encrypt your wallets
Bitcoin-Qt wallet encryption setup
Without getting into too much detail, encryption means requiring a password to use the contents of your wallet. This is especially important if you regularly use mobile, hardware, or desktop wallets to prevent someone from stealing your computer, phone, or hardware device and gaining access to the information in your wallets. As always, make sure to use a strong, unique password that you can memorize or keep in a safe place. If you are unsure about the strength of your password, check out Mircosoft’s password checker tool.
5. Make sure software is up to date
It is important to regularly update the wallets software you are using to make sure the latest bug fixes and security protocols are in place. Hackers can take advantage of weaknesses in older versions of the software to gain access to your key information. You can view an updated list of known security threats here to make sure your service is taking steps to guard against them.
The world of bitcoin and digital currency is an exciting and ever-evolving playground for innovative technologies. New applications are being discovered daily, and more and more people are finding bitcoin a useful and beneficial form of currency for everyday use. With these innovations come new risks, and as more of the world becomes adopters it becomes the responsibility of every bitcoin holder to follow these steps to ensure that the digital currency market stays safe for everyone and trust in the security of bitcoin can grow.
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