How to secure your bitcoins?
Scamming is one of the key reasons of why bitcoin owners lose their funds – to be sure, the second-most widespread reason is inadvertence. BTC can be lost on any stage of their lifecycle, from choosing a right exchange to keeping crypto in a wallet. A tech-savvy user knows how to avoid the most common pitfalls and prevent bitcoins from being stolen or otherwise lost. Some people remember a funny anecdote about a Bloomberg TV show on which Matt Miller unwittingly showed for camera a piece of paper with a private code – it was a gift from a guest. Within mere minutes, some man, who was watching the TV show, used that private code to gain possession of those funds. Fortunately for Matt, that guy returned the money to him. This is to illustrate that following some simple safeguard rules is of paramount importance in order to protect your funds from malicious actions of third parties.
The most common mistakes to avoid when dealing with bitcoin wallets
Whichever wallet type a user chooses, it is important to remember that the private key must be controlled only by its owner. It should never be revealed to anybody else. A private key acts as a PIN for a debit or credit card. The 16-digit code on the face side of the card is a kind of public key, and a card holder can show it without compromising safety. But a PIN (a private code) must never be shared with another person. Each wallet has different layers of security but the ultimate protection rests upon a bitcoin owner. There were a huge number of bitcoin scams that could have been avoided should people be more cautious.
Failure to encrypt a wallet and create backups
Bitcoin holders sometimes ignore the necessity of encrypting their desktop or mobile wallet for additional crypto safety. This measure can help if the device is physically stolen. Unencrypted funds stored on the stolen wallet are an easy target for crooks. For the same reason, bitcoin holders are strongly encouraged to create duplicates of their private keys. If one storage device is damaged for some reason (a hard disk failure, theft, flood), the private keys would be available on the other medium (paper, Trezor, etc.).
Putting all eggs into one basket
Financial experts warn potential depositors against keeping all their money in one bank. Diversification is a major key to safety of funds, whether fiat money or crypto. Bitcoin owners are advised to stick to the following tip: Ready-to-use bitcoins for frequent trades can be deposited to online or mobile wallets to provide very quick transactions. High figures would be better kept in cold storage with no internet connected. If a web wallet gets compromised, the other private keys are still secure and you are not crushed.
Failure to double check a bitcoin address
Before transferring bitcoins to a person, a sender should make sure that the receiver’s bitcoin address is typed or copypasted in a correct way. Bitcoin transactions are irreversible and in case of an erroneous transaction the sender cannot retrieve the bitcoins back.
The same considerations should be taken into account when making a deal on P2P platforms that involve direct arrangements between peers. A bitcoin holder should remain wary and vigilant if a counterpart says, “Please send me your bitcoins and I will then deposit money on your VISA debit card”. There is high risk that a stranger will gain possession of the bitcoins without sending the traded money to you.
Security measures to be taken by a user for extra safety of bitcoins
In many situations, taking standard security measures – like the ones described above – suffices to rest assured that the bitcoins are stored in a safe way. However, experience shows that people often spurn less obvious things, which in some cases may compromise safety of your bitcoins. To fend off attackers and avoid accidental loss of bitcoins, users should take heed of those extra safety measures:
New email address
This simple yet often ignored step can prevent online fraud. When creating an account on an online exchange or web wallet, the service normally asks for a valid email address and most people usually indicate their personal or business email address that has been used for many years. Even if the user has a strong password for the web wallet, all a hacker needs to do is to crack your email password if it happens to be extremely simple and common. Then the attacker would be able to recover the password to your web wallet. With this in mind, a bitcoin holder should create a dedicated electronic mail with secure and complex password which is hard to crack.
A 2FA is normally offered in all reputable exchanges and web wallets as an advanced protective measure that a user should not leave unaddressed. Simply said, a two-factor authentication means a user is asked twice to confirm a transaction or enter the account. Without a 2FA enabled, a user just has to enter a password to open the personal account, which can be a sitting duck for some attackers. With a 2FA put in place, a user has to provide an additional proof of his entitlement of the account, along with entering a correct password. The most common 2FA tool is a standard SMS verification. More reliable mechanisms are an authenticator from Google (an app that must be installed on a user’s smartphone), a U2F security key (a USB device) and others.
Desktop or mobile wallets are in fact specialized software, and as any other software they are vulnerable to malware, viruses and other malicious content that can potentially cause the device to crash or steal important data including your private keys. For that purpose, it is required to run background checks and perform regular (weekly/monthly) antivirus scans to timely detect and remove potential threats.
Here, the same considerations as above apply. To enter an online wallet, another web browser should be used – not the one used in daily activities. The point is that some browsers can be malware-laden if used for a long time on a device and an anti-malware solution can sometimes fail to provide total protection, especially if the antivirus is outdated. In view of this, users are recommended to enter their online wallet from a dedicated web browser, which is updated to the latest version.
Fake email messages
Phishing attacks are still among the major challenges facing a bitcoin holder. Being on the lookout for their victims, scammers often use social networks and electronic mail. A fake electronic message can impersonate an online wallet service or exchange where the user has an account with. Yet a phishing email has some irregularities in sender’s address, logos and other minor details. The most common advice is to never load or open suspicious attachments and never navigate to links included in these emails. Alternatively, a user may address the web wallet from which the email was allegedly received to ask for the validity of that message.
Efforts spent on security should be pro rata to the amount of valuable stock and sensitive information kept on your device. The key findings that a bitcoiner can take away from the tips above is to always stay vigilant and use up-to-day security methods to safeguard digital currency. When in doubt, it is better to double check the uncertain aspects before the final bitcoin transaction. Consulting these and other reasonable instructions will allow you to protect your property with ease.