One thing that gives most Bitcoin investors sleepless nights is the security of their coins. If you’re keenly following Bitcoin, you must have heard news of people who bought Bitcoins, but lost access to their Bitcoin wallets when the price skyrocketed. So if you’re thinking of investing in Bitcoin, you must be a worried man right now, and top of your agenda is to find ways to make it safe and secure. And if you’re a long-term Bitcoin owner, you’re probably thinking of taking your storage setup up a notch. This article explains how you can secure your Bitcoin:
Bitcoin wallet – A look at how it works
What you need to know is that storing Bitcoin doesn’t mean storing a physical object. Bitcoin is actually an encrypted address on the cryptocurrency technology (block chain technology). Essentially, you own a unique key, which open ups a particular Bitcoin location. That unique key is what people protect at all costs by keeping it safe in a wallet.
With that protected, you can look at other techniques to securely store your Bitcoins. And this will depend on the level of security you want.
Storing your Bitcoins in a hardware wallet is advantageous
Most people choose to store their Bitcoins in a digital wallet online. Some choose to store them locally on their computer or smartphone. However, the downside to digital wallet is that it’s in the public view, which means it’s susceptible to attacks from phishing scams and hackers. The surefire way to store your Bitcoins securely is a hardware wallet. The good thing about a hardware wallet is that it stores your Bitcoins offline, and this helps to keep hackers and phishing scammers at bay.
A lot of hardware wallets out there mimic USB drives, which means they can be effortlessly connected to any computer. These hardware wallets use PIN numbers and passwords known as seed for security purposes. Don’t make the mistake of forgetting your password. If you do, you’ll be screwed. It’s recommended that you write the password on a notebook and keep in a safe place.
The downside to hardware wallet is that if you lose it, you’ve basically lost your Bitcoins. Therefore, it’s a good idea to have a backup or a separate encrypted storage device. Also, keeping all your Bitcoin in a hardware wallet will present challenges when you want to use them. That’s why you should store some in your digital wallet online.
You can also use a paper wallet if you don’t want to store your Bitcoin online, and you don’t also want to store them in a hardware wallet. As the name suggests, a paper wallet is just a piece of paper with your Bitcoin details printed on it.