The news is by your side.

How To Safely Store Your Bitcoin

0 1

Get real time updates directly on you device, subscribe now.

Congratulations on purchasing your first Bitcoins! Now that you’ve bought your
Bitcoin, you’ll need to keep it secure. You can do this by transferring it off the
exchange and into what is known as a Bitcoin wallet. The name wallet implies
that you can do all the same things you can with a regular wallet. You can see
how much Bitcoin you have, and use it to spend your Bitcoin. An important
distinction to make is that because Bitcoin is decentralized and stored on the
Blockchain, these wallets do not “store” your Bitcoin per say.
While exchanges like Coinbase do provide you with your own wallet, unless you
are day-trading, it’s advisable to remove your coins from the exchange in order
to prevent against issues like hacking – which unfortunately does happen
In 2011, Tokyo based Bitcoin exchange Mt. Gox suffered losses of over $27.2
million and 80,000 users lost a total of over $460 million worth of Bitcoin after
the exchange was hacked. Mt. Gox wasn’t some fly by night operation either, in
fact at the time it was the largest cryptocurrency exchange on Earth. Yet poor
security protocols and mismanagement allowed the attacks to occur. The
company eventually filed for bankruptcy amid allegations of fraud, and much of
the userbase’s stolen coins have not been recovered to this day. This is why it’s
paramount that if you want to hold your coins for the long-term, you store them
safely.
The understand wallets, we must first understand just how they work. Bitcoin
transactions need both a private key (from the sender) and a public key (from the
receiver) in order to process correctly on the blockchain.
A public key is a series of between 26 and 35 alphanumeric characters e.g.
1Co5CmEZNz35Am59EcFhKGRdNfLrzppGkJ
If you can this address to someone, they can send funds to your wallet. It is
perfectly safe for you to give your public key, also known as your wallet
address, to anyone, as they can only deposit into your account with this
information. In 2013, a college student received 22 Bitcoins (then worth around
$24,000) by holding up a sign with his public key in the form of a QR code on
an edition of ESPN’s College Gameday.
Your private key on the other hand should be held by you, and you alone. Never
give your private key to anyone.

There are numerous types of wallets you can use, here is a breakdown of each one.

Desktop Wallets
A desktop wallet are a convenient medium between moving your Bitcoins off an
exchange, while not having to carry around additional information like with a
paper or hardware wallet. You can think of these like a Bitcoin bank account on
your computer. Most desktop wallets will encrypt your private keys for you to
add an extra layer of security. Here is a run-down of some of the more popular
desktop Bitcoin wallets. All the wallets listed below are free, you should never
pay for a desktop wallet.
Electrum – https://electrum.org
While it’s design may not win any awards, Electrum does the job it’s supposed
to. The code is open source, which means there’s a much lower possibility of the
development team slipping in something malicious. Electrum allows you to store
and spend your Bitcoins with relative ease. It has the advantage of storing your
private keys offline, and to go online in “watching only” mode, so if your
computer gets hacked during the process, hackers won’t be able to spend any
coins. It also has support for various hardware wallets.
Exodus – https://www.exodus.io/
Unlike Electrum, Exodus is not open source. However, Exodus does have the
advantage of being capable of storing other coins like Ethereum, Litecoin and
Dogecoin in addition to Bitcoin. The interface is also more user-friendly than
Electrum.
It should be noted, that as desktop wallets require your computer to be connected
to the internet, they can never be 100% secure.
CoPay – https://copay.io
CoPay operates on both desktop and mobile platforms, so it’s great if you’re
looking to spend or receive Bitcoins on the go. It requires multiple signatures
(ways of account verification) to spend coins, which is an added security feature.
There’s a multiple user option as well, which is useful for groups and families.
The software’s code being open source is always a plus.

Paper Wallets
Paper wallets are simply notes of your private key that are written down on
paper. They will often feature QR codes so the sender can quickly scan them to
send cryptocurrency.
Pros:
● Cheap
● Your private keys are not stored digitally, and are therefore not subject
to cyber-attacks or hardware failures.
Cons:
● Loss of paper due to human error
● Paper is fragile and can degrade quickly in certain environments
● Not easy to spend cryptocurrency quickly if necessary – not useful for
everyday transactions
You can use sites like bitaddress.org to create non-secure paper wallets online.
These are known as non-secure as you have to be connected to the internet in
order to use them. If the site is hacked, then hackers can access information
regarding all private keys that have ever been created.

Get real time updates directly on you device, subscribe now.

Leave A Reply

Your email address will not be published.

Subscribe to our newsletter
Sign up here to get the latest news delivered directly to your inbox.
You can unsubscribe at any time

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More