Safe Ways to Store Bitcoin
Bitcoin prices peaked in 2017, and then the prices faded. Today, cryptocurrencies like Bitcoin are experiencing a definitive surge in value, surpassing all previous highs. This surge in value is thought to be one reason for the increase in hacking. The rapid rise in Bitcoin value has sparked significant investor interest.
Many Bitcoin investors who are new to the system are unaware of the methods to employ to maintain security. It is this inexperience that hackers are preying on, coming up with ingenious methods to steal the funds. Some thefts have taken place in plain sight. Some reroute tokens bound for a specific wallet to another. As victims watch their tokens disappear, there is little they can do about it.
Cash and cards are kept in a physical wallet. Bitcoins are kept or stored in a wallet as well, except the wallet is digital. A digital wallet can be web or hardware-based, it can reside on a mobile phone, a computer, or the access information can be printed out.
How safe are any of these wallets?
The safety, or lack of it. depends on how the user manages it. Every wallet is protected by private keys. Without the keys, the currency contained in the wallet cannot be accessed. The most obvious downside in Bitcoin security is either losing the private key or having it stolen.
Without the private key, the owner of the wallet contents will never see the Bitcoins again. As well as losing the private key, the owner may lose their Bitcoins in the event of a computer malfunction, perhaps the hard drive crashes. The coins can also be lost to hackers, or by the loss of the computer that is being used to store the digital wallet.
There are ways to store Bitcoin safely.
Wallets that are stored online are known as “hot wallets.“ These wallets operate on devices connected to the internet, devices such as phones, computers, and tablets. As the private key is generated by the wallet, wallets kept on internet-connected devices are vulnerable. Hot wallets are convenient, allowing the Bitcoin owner to make transactions quickly, from anywhere, they do lack security.
Bitcoin owners who do not employ strong security when using hot wallets are easy prey for hackers. Having the contents of the wallet stolen is not an infrequent occurrence, and the theft can happen in several ways. Boasting on a public forum about the value of your wallet’s contents, while not employing strict security is not a wise move.
Wallets are to be used for storing small amounts of Bitcoin. A hot wallet is akin to a bank current account. Financial wisdom says you only keep operating funds in this account while the bulk of your money is either kept in a savings account or an investment account. The same can be said for hot wallets.
The safer option for holding crypto is a cold wallet. Simply stated, a cold wallet is not connected to the internet. As a result, it stands less risk of being compromised. Cold wallets are often referred to as “offline’ or “hardware” wallets.
A cold wallet stores the owner’s address and private key details on a device that is not connected to the public internet. Cold wallets typically employ software that works in parallel, thus allowing the user the opportunity to view their portfolio without jeopardizing their private key.
A paper wallet is seen as the most secure way to store Bitcoin and other cryptocurrencies. A paper wallet is a variance on a cold wallet, one that produces both public and private keys that, in turn, can be printed on paper. The only way to access the crypto held in addresses protected in this manner is to have the paper document. Many people who employ this method of security store the paper wallet in a bank safety deposit box or their home safe.
Although cold wallets are considered the most secure way to store any crypto, they do require a certain amount of knowledge to set up.