With the added freedom of using bitcoin comes the extra responsibility of keeping your money secure by yourself. There are no government or corporate guarantees and (in most cases) no insurance. Fortunately, bitcoin software security has improved a lot in the past eight years and gets better every day. However there are still precautions you should take yourself.
Software Wallet Security
Use a long, secure password where possible, and make sure you write it down and keep it in a safe place. Centralized wallet services may be able to recover a lost password, but locally-saved ones won’t! The same goes for PIN numbers and “recovery seeds” on some wallets.
Do not keep your entire bitcoin savings in one place — and definitely do not store them on an exchange. Even the most successful exchanges are under constant threat from hackers just waiting for the right moment. The only coins you keep on exchanges should be balances you wish to trade.
Even though locally-saved wallets are more secure, best advice says not to store all your bitcoins there either. For longer-term storage, use a hardware wallet or form of “cold” (offline) storage.
Hardware Wallet Security
These are standalone devices that generate bitcoin keys which they keep separate from the internet. They come in a variety of shapes and feature sets, with some using desktop apps as their user interfaces and others working as standalone devices. To date, there has not been a significant theft from a bitcoin hardware wallet.
Stay Secure with Cold Storage and Paper Wallets
This is another, older form of offline storage that again employs keys that do not touch the internet. Cold storage, which often involves printing physical keys on paper, metal or even wood, is meant as a solution for large and longer-term bitcoin balances that you don’t need to spend from on a regular basis.
However, be warned that even cold-storage keys must be generated offline on a “clean” (i.e.: malware-free) computer to be safe. And whatever physical format you use, you’ll be responsible for keeping them safe.
How do you keep your bitcoins safe? We’re always open to suggestions.
Now that you know more about keeping your bitcoins safe, you may have even more questions, such as:
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