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How to Keep your Bitcoins Safe

In today’s post, we will learn how to store and keep our valuable and precious Bitcoins safely. In truth, Bitcoins are not stored anywhere. It is just a purely digital entity. They are accessible through Bitcoin addresses which require a set of digital keys for entry. Every Bitcoin address has two keys: a “public key” and a “private key.

Bitcoin addresses are derived from public keys, and these Bitcoin addresses are shared. Let’s get more understanding with a simple example. Think of it like sharing your email address with someone. Other people can send you an email but can’t get into your inbox to read your emails. Similarly, nobody can get into a wallet and take Bitcoins from it with a public key. So, it can only be used to send bitcoins. Therefore, it is safe to share.

A private key is very important. You should never share it with anyone. It allows users to take bitcoins from a wallet or to send them to others. You must protect your private key to keep your bitcoins safe. Whoever holds the private key is considered to be the “owner” of the bitcoins at that address.  There are a few different methods that you can apply for protecting your private keys.

To hold a private key, the first step is to encrypt bitcoin wallets with a private password. But this is generally the most basic level of security.  Someone could potentially be breached by computer hackers or viruses. Others opt to keep their access offline completely. Instead, they hold private keys in disconnected databases to remain safe from threats on the internet.

As an advanced approach, many users utilize multi-signature addresses. It allows several parties to hold a fraction of an address to a key or to hold one of many keys that are connected to a single address. When one user wants to access the bitcoins, these other holders will have to approve the transaction as well. The number of signatures necessary can be customized and users can set it up so that the multiple verifications is provided by individual devices that are each controlled separately.

After learning about public keys and private keys, let’s understand about wallets and tips for securing bitcoins.

  • Online Wallets

Having a web-based wallet is good when you want to have access to your bitcoins anywhere at any time. However, this means your coins are controlled by someone other than you. In addition, it can place great power into the hands of the organization that runs your online wallet because they have the private key.  Here are a couple of known online wallet sites: Blockchain, Coinbase, Strongcoin. Out of these three, Strongcoin is the only one that allows you to encrypt your private keys before sending them online, offering a bit more security.

Encrypting means setting a very strong (at least 16 letter) password with capital letters, punctuation marks, numbers, etc.

Tips on remembering your password:

  1. Write it down on paper and keep it in a vault or something with a powerful lock. Basically any place you keep your most expensive and precious things.
  2.  Make a password that is difficult for anyone you know to figure out, but something you can still remember. In short…memorize it.

Backing up your wallet ensures that if all else fails (computer crashes, the phone gets stolen, you get fired from work… etc) you can restore your coins. Bitcoin wallets have hidden private keys. If you only have a backup for your visible Bitcoin addresses, you will not be able to restore all of your money. Therefore, it is best for you to backup your entire wallet.

If your bitcoin wallet is not up to date, it might be susceptible to theft and hacking. Thus, it’d be in your best interest to keep it updated. This will ensure that your coins receive more security and stability. Remember to update all the other software on your computer or phone as well to keep your wallet secure. A safe environment provides security for your money.

Like with securing your physical wealth, you should review your options carefully and decide the best way to keep your bitcoins safe. Hope this post helps.

Enjoy Learning!

1 How to Keep your Bitcoins Safe

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