How do I keep my Bitcoin safe and secure? Many new Bitcoin holders ask themselves this question due to the vast number of horror stories out there about people getting all their coins stolen through hacks, phishing attacks, or even assaults. This is a horrifying thought for many not only because of the personal security risk, but also because of how life-changing these lost Bitcoins could have been.
The main problem that most people find when trying to learn how to keep their Bitcoin safe is that most of the available information about cryptocurrency security out there is not only extremely hard to understand, but often even incomplete or incorrect. This is exactly the problem that I will be addressing in this article. In this guide I will show you several simple methods that you can follow to keep your Bitcoin safe, together with some next steps that you can follow to start keeping your Bitcoin secure today.
After you reach the end of this article, you will know precisely what to do next to store your Bitcoin securely and avoid it ever being stolen or lost. Let’s get started!
How to keep your Bitcoin safe
Look out for Bitcoin phishing attacks
Phishing attacks are a method by which bad actors pretend to be someone else in order to get you to send them your password or the private key of your Bitcoins. This is one of the most widespread and devastating scamming techniques on the internet and spans across countless industries.
A particularly devastating phishing attack was the one performed on Sony back in 2014. During the Sony attack, the bad actors sent phishing emails to several Sony employees which enabled them to get access to private data of the company. The attack resulted in a $100 Million loss for the company.
In the cryptocurrency world, phishing attacks come in many forms and shapes. However, by far the most common mediums are email and twitter, and the most impersonated platforms are cryptocurrency wallets and cryptocurrency exchanges. A common attack that you may come across is an email that looks like if it was sent by your cryptocurrency exchange of choice that asks you to log-in and to reset your password. If you clicked on the link provided in the email, you would then be linked to a site identical to the cryptocurrency exchange, and the moment you enter your password the attacker can now use it to steal your coins if you did not activate two factor authentication.
To keep your Bitcoin safe from phishing attacks, you need to adopt a mentality of never trusting and always verifying when someone instructs you to do something.
Be careful who you tell about your Bitcoin holdings
The most important rule in cryptocurrency is not never tell anyone how much cryptocurrency you hold. Although this is especially important when interacting with strangers on the internet or under other circumstances, it also applies to your friend circle and even your family. It’s obvious that your friends and family won’t be doing you any direct harm to steal your coins, however, they may do so indirectly by mentioning your holdings to someone with ill intentions in mind.
The reason why its such a massive risk to tell people about your Bitcoin holdings is that on the contrary to bank accounts where every transaction is tied to an identity, Bitcoin transactions are not. Furthermore, bank transactions can be reversed in some cases, and Bitcoin’s can obviously not. This leads to a situation where a thief could just send your coins to his Bitcoin address after stealing them, and there’s nothing you can ever do to get them back.
There have been tens of thousands of cases of people that lost all of their coins, and in some sad cases, they also lost their life. One troubling example is the case of Pavel Nyashen, a russian Bitcoin blogger that was found dead in his apartment after bragging on YouTube about how much Bitcoin he held. Another case is the one of a Norwegian man that was brutally murdered after conducting an in person Bitcoin trade, something that should also be strictly avoided without all the necessary security precautions.
That being said, this should not scare you away from openly talking about Bitcoin. In order to grow and keep gaining traction, Bitcoin needs to be talked about and its benefits over the legacy financial system need to be shared. However, you should avoid under all circumstances to mention how many Bitcoins you hold, or even insinuate that you might hold a significant amount. Keep in mind that depending on where you’re currently at, people might be ready to commit horrible crimes for just a few hundred dollars.
Consider buying a cryptocurrency hardware wallet
By far the most secure way of keeping your Bitcoin is are cryptocurrency hardware wallets. In essence, a cryptocurrency hardware is a device that generates and stores your private keys offline, leaving them out of reach of hackers. Furthermore, most hardware wallets force you to verify outgoing transactions with the click of a physical button. This automatically protect your coins from remote take-over hacks or trojan viruses, since the attacker obviously can’t click a physical button in your room while sitting in front of his computer in another continent.
There are countless cryptocurrency hardware wallets, and they all support all major cryptocurrencies. Although most cryptocurrency hardware wallets are similar in the sense that they store your private keys offline, they all have slightly different features like touch displays, retro designs, built-in coin exchanges, and more. Therefore, before purchasing a cryptocurrency hardware wallet you will have to compare all these features and decide which ones you care about the most.
In order to make it easier for you to find the hardware wallet that will be the best fit for you, we prepared a comparison table of the best cryptocurrency hardware wallets that compares crucial components like security, price, design, and the points mentioned in the previous paragraph. With that in mind, please remember that cryptocurrency hardware wallets won’t be able to protect you under absolutely all circumstances. If, for example, an aggressor breaks into your house with a gun and tells you to send him your cryptocurrency, then there isn’t much that your cryptocurrency hardware wallet will be able to do for you.
Never leave your Bitcoin on exchanges
Many people opt to keep their Bitcoins on cryptocurrency exchanges since Bitcoin wallets can often be confusing. This is especially the case for people that are just getting started in the cryptocurrency space and that usually leave their coins on cryptocurrency exchange for beginners like Coinbase or Kraken.
While these exchanges are among the most trustworthy companies in the space, that does not protect them from external circumstances like hacks or government crackdowns. History has shown over and over again that even the largest cryptocurrency exchanges do get hacked, and that the results are always catastrophic.
The first major cryptocurrency exchange hack was the hack of Mt Gox back in early 2013. During this hack, over 850,000 Bitcoin were permanently lost and tens of thousands of investors lost all of their coins. This became even more devastating for the victims as the Bitcoin price skyrocketed to $20,000 per coin just a few years later.
There is a famous saying by Bitcoin holders that goes “Not your keys, not your coins”. This catchy phrase clearly draws a parallel to the devastating bank bail-ins that happened during the 2008 crash and aims to spread the word about how important it is to never leave your Bitcoins with any third party.
Be careful with Bitcoin investment opportunities
Highly volatile markets and hundreds of hype-driven altcoins make the cryptocurrency space a speculator’s paradise. However, with great opportunity comes great risk. Aside from 20%+ price chops that can quickly liquidate a portfolio that is using an excess of leverage on exchanges like Bitmex, there are also countless investment opportunities that are outright frauds. Some of the most common ones include ponzi schemes, scammy coins where the founders dump all their own coins on other people, and others where the price is entirely manipulated by a handful of players to pump it to unprecedented highs.
If you are just starting to invest in cryptocurrency and want to keep your Bitcoin safe, stick to BTC and maximally 2 or 3 of the larger altcoins. Shady Bitcoin investment opportunities can often be even more dangerous than hacks because they appeal to our sense of greed and make us blind to all the red flags.
CoinDiligent Staff Writer