Beginner’s Guide to Bitcoin Security
Keeping your bitcoin safe is one of the most important things you can do once you have decided to get into bitcoin. You have probably heard of people who have lost their fortune through crypto theft or those who have forgotten their private keys and they cannot access their crypto assets in their wallets. Such cases can easily happen in the bitcoin space.
Unlike with a bank account, it is impossible to reverse a transaction, making it difficult to recover lost bitcoins. Additionally, bitcoin wallet providers do not offer an opportunity to reset your private keys, as you can do with your bank accounts. However, these features have their advantages. Irreversibility of bitcoin transactions ensures the bitcoin network and transactions remain immutable. Also, the inability to generate another private key for a wallet ensures that the wallet user has full custody of their bitcoins. This means that you must take responsibility for the security of your bitcoin assets. Here is how to keep your bitcoins safe.
Use cold storage
Cold wallets store your private keys offline, making it impossible for hackers to access your wallet. You can use a paper wallet, memory wallet, a computer without a network, or special hardware (cold wallet). Cold wallets are immune to hacking, even when they are connected to a computer through a USB-C cable or Bluetooth. Cold wallets sign transactions using in-device”, meaning your private keys never leave your device even when making transactions. When using cold storage, you can only lose your funds when you lose your wallet device. Some of the most popular cold wallets are Ledger, KeepKey, and Trezor.
Have a Secret Private Key Recovery Phrase
While cold wallets give you control over your bitcoin security, you may run into some problems. You may forget your password or your device may get lost or damaged. In this case, you can lose your bitcoins.
You can use a backup seed phrase (recovery phrase) to recover your wallet. A seed phrase is a set of 12 or 24 words derived from your private key and provides access to it. You can enter the seed phrase into any other hardware wallet and recover your private keys to get back control of your coins. You should keep your seed phrase private and secure. You can write it on paper and store it in a secret place. Some people also inscribe their seed phrase on crypto steel (special metallic plate) to ensure durability and prevent destruction by a natural disaster, for example, a house burning down. You can also use an encrypted local drive or USB to store your seed phrase.
Secure your Personal Computer and Mobile Phone
Sometimes you may prefer a hot wallet over a cold wallet for convenience. Hot wallets are easily accessible and suitable for traders or daily crypto users. In this case, you have to keep your personal computer or mobile phone that you are using to access the wallet safe. It may only take one security vulnerability to have your computer hacked.
Phishing is the most common type of attack you can experience on your PC. It involves scammers using malicious emails to try and get access to your account details. This could be your private key. Historically, phishing attacks have been conducted through email messages and web pages. However, there is a rise in mobile phishing that uses mobile devices such as smartphones and tablets to deliver malicious content.
One of the tips to avoid phishing attacks is to verify the links you are clicking on your computer. Scammers may create clone websites designed to collect your personal information. Always confirm the URL of the website you are searching and be careful of the redirecting links. Also, avoid clicking on links or opening attachments on emails from unknown senders.
Activate Two Factor Authentication (2FA)
You can add another layer of security to protect your bitcoins. 2FA involves a second layer of protection wherein a system sends in a verification code on your trusted device after you have entered the password or transaction details.
The verification code can be sent as a push message, which sends a signal to your phone to approve or deny access to your wallet to verify your identity.
An SMS or text messaging is also a common type of 2FA. In this method, you are prompted to interact with the text or use an online time code to verify your identity before accessing your wallet.
There is also voice-based authentication, which works in a similar way to push notifications. However, in this case, the identity is confirmed through automation. The voice may ask you to press a key or state your name to identify yourself before you gain access to your wallet.
Two-factor authentication makes it even harder for hackers to steal your wallet details. The process may seem tiring, especially when you have to go through the process all the time you want to use your wallet. However, it is better than losing your bitcoins to scammers.
MultiSig stands for multiple signatures. It requires multiple people to sign in to access the bitcoins in the wallet. MultiSig is often used by corporates. However, anyone can use it. Electrum, Armory, and Coinbase are some of the wallets with MultiSig support.
Keeping your coins secure should be your first priority when you are dealing with bitcoin. Always remember that anyone with your wallet’s private keys has access to your bitcoins. You should use all appropriate means to secure it.