How to Protect Your Bitcoin Wallet 2018

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protect your bitcoin wallet
protect your bitcoin wallet

Table of Contents

How to Protect Your Bitcoin Wallet?

In recent times, cryptocurrencies have gained popularity. Many people now carry out transactions using cryptocurrencies instead of physical cash. Since the whole world is going digital it is believed by some that cryptocurrencies will eventually fade out all other currencies and so it is gradually becoming widely accepted, but it still has its drawbacks.

What is Cryptocurrency? Explanation

A cryptocurrency is simply a virtual or digital currency that serves as a medium of exchange, using cryptography to secure its transactions. Some examples include the Bitcoin, Litecoin, and Etherium, which are among the most popular cryptocurrencies. Bitcoin was, however, the first cryptocurrency to gain popularity. It was first introduced in the year 2008. Bitcoin is operated through a peer-to-peer system without a centralized authority or intermediary. Hence users deal with each other directly. Some countries have officially accepted the bitcoin as a means of payment and even subject its transactions to tax as normal transactions are. While it is widely used as a means of payment for transactions, some hold bitcoin as an investment.

The amount of bitcoin a person has is held in a wallet known as a bitcoin wallet.

Every wallet like a bank account is peculiar to each owner. Each holder has an ID, and his or her wallet is protected by a password. However, because the bitcoin has no central authority to which complaints can be made, if you lose your bitcoin, then it’s almost impossible to get it back. It is important to secure your bitcoin wallet, as it can be susceptible to hackers, fraudsters or thieves. There have been several cases of bitcoin theft with each case peculiar to the next hence been security cautious cannot be overemphasized.

The following are ways you can protect your wallet:

  1. Use a versatile bitcoin client

You can own a bitcoin wallet with a bitcoin client that enables you to change your bitcoin address for each transaction you make. This way your IP address is protected.

  1. Encrypt your wallet

Use strong passwords to encrypt your bitcoin wallet, and it is even advised to write your password down on a piece of paper so that you don’t forget it.

  1. Use a two-factor authentication

A two-factor authentication requires your password and then another one-time password that will be sent to you before any transaction can be carried out.

  1. Back up your bitcoin wallet

You should frequently back up your bitcoin wallet to shield yourself against some common errors such as losing your computer or mobile device, computer failure, and any other mistake. A wallet back up enables you to recover your wallet in the event of unfortunate events.

  1. Beware of online services that require security permissions

Be careful not to use online services that may require you grant security permissions to function except you are very sure of them. Do not grant permissions to any service you are unsure of.

  1. You can use multiple security processes.

Some bitcoin clients require several security procedures before a single transaction can be carried, e.g., using a two-factor authentication, creating unique bitcoin addresses and VPNs. These security processes help to secure your bitcoin wallet.

  1. You can have different wallets or use different storage methods

You can decide to have different bitcoin wallets depending on your transaction type so that you can minimize the risk of losing your bitcoin. You may use a hot storage method, which basically is an online storage mode where you have mobile wallets or desktop wallets or basically any wallet that requires an online device to function. Here you can follow any of the above-mentioned methods to secure this storage method. You can also decide to make use of the cold storage method where you store your bitcoin in an offline mode until you need to use it. This is more advisable to holders who do not intend to frequently carry out bitcoin transactions.

Related: A BEGINNER’S GUIDE TO BITCOIN MINING 2018