While bitcoin offers us unprecedented control over our finances, it comes with a massive step up in responsibility and security. Unlike banks or other financial institutions dealing with your money, Bitcoin offers no recourse for coins being stolen, or reversal of a transaction to an incorrect wallet address.
“With great power comes great responsibility.” - Uncle Ben, Spiderman
Sadly, as a more technically oriented system, many less tech-savvy people rushing into Bitcoin fall prey to gaping holes in their security practices, leaving them wide open to become the next victim of cybercrime.
With hacks, scams and viruses on the increase, we offer the below points as on how to ensure your bitcoin remain safely in your hands!
One of the worst things we can do as individuals interacting online is to use weak or generic passwords. You know the ones … birthdays, partner’s or children’s names, or the ever classic Password or P@55w0rd. Whether it is your email, a favourite online store, or your bitcoin wallet, selecting a strong password is a good first line of defence against would-be hackers.
It is advisable to create passwords that are between 12 - 16 characters, using a blend of numerals, uppercase and lowercase letters and special characters. A secure password vault is even better, as it can not only safely store your passwords for multiple accounts in one place (behind a mega-difficult-to-crack master password) but can generate these strong passwords for you.
Web wallets are run from your web browser, and are therefore exceptionally vulnerable to cyber attacks such as hacks. Unfortunately, these are generally the first types of wallets new users would come across, and if not familiar with the process, may lack sufficient additional security measures in place to adequately protect their funds.
If you must use a web wallet (not recommended), ensure that you carefully read instructions on how to better secure and at the least, implement two factor authentication that requires you to enter a generated code from your mobile device to confirm transactions.
Exchange wallets also fall within this category as they serve more like a bank account, acting as a third party between you and your money, and as such has certain associated risks. Firstly, as a mostly unregulated industry, there are few online wallets or exchanges that can offer any ‘insurance’ of your coins. While they may adhere to stringent security practices, even large, established exchanges are ‘honey pots’ and have become the targets of determined hackers, with users losing large amounts of funds. Once again, take steps to add additional security such as two factor authentication and only keep a minimal amount of your total balance in an exchange.
Just as you would not walk around with your entire wealth stashed in a single wallet, you should not do the same with your bitcoin balance. By separating your funds, and holding them in different wallets, you can diminish your overall risk of loss. We recommend that at a minimum, you have one wallet funded for general spending and another (or several others) kept aside for saving and investment purposes.
Hardware wallets offer a great balance between ease of use and high security measures. These devices essentially guard your private keys, as they are malware resistant, and you are able to sign and verify transactions on the device. Only the signed transaction is then sent to the network via the computer, keeping your private keys separate from any vulnerability point.
Cold storage wallets are similar in that they hide your private keys offline, on a computer that has no connection to the public internet or unsecured network. Transactions are generated online, but then sent offline to be signed and verified, before the signed transaction is passed back to the online environment to be broadcast to the Bitcoin network.
Email is often used by spammers and scammers to elicit personal information from you, commonly known as phishing. Posing as recognised financial institutions and the like, you may not even realise that it is a spoof email. It is imperative to keep your wits about you with emails asking for your confirmation of transactions or personal information such as login details or pins.
These tricksters have become incredibly sly and their emails will often have the exact look and feel of a legitimate business, right down to logos and official telephone numbers. But there are bound few tell-tale signs if you look carefully:
Unfortunately in this digital age, one needs to view email with a dose of healthy scepticism. If anything seems suspicious, it more than likely is. Particularly avoid those emails with promises of money transfers upon confirmation of personal details, and if you do not have an account with the business in question, flag the email as spam and move on safely.
When it comes to the security of your bitcoin, nothing should be left to chance. If you elect to take a DIY approach to cryptocurrency investment, we urge you ensure you are fully acquainted with the best security measures to safeguard your funds. Alternatively, you are able to entrust your investment - including its safety - to a cryptocurrency investment firm such as Bitstocks, who will help you not only secure, but grow your cryptocurrency wealth in the safest manner.