Whether you’re storing real money or cryptocurrency, the way you are going to do so is extremely important because money, any kind of it, is always susceptible to thievery. Similar to storing real money currencies, cryptocurrencies also have their type of wallets, and you should really handle these with even more care than your regular wallet or credit card. Here is a couple of things that every Bitcoin owner should know when it comes to safety and security.
Keep your bitcoins well protected
It’s important to get yourself well familiarized with digital security as well as bitcoin security if you do not want your account to be hacked and have your hard earned money stolen. To send or spend bitcoins, one must have access to both public and private keys. Private keys, especially, must be protected. Because you are not actually storing bitcoins, you are storing these keys which are used to access your public bitcoin address and sign transactions.
Types of bitcoin wallets
This sensitive info is stored in bitcoin wallet and they of course come in many forms.
You have 5 types of bitcoin wallets:
- desktop wallet
- mobile wallet
- web wallet
- paper wallet
- hardware wallet
Of course, whichever you choose, it’s very important to secure and back up your bitcoin wallet. So let’s go over all of these, see how they work and you can decide what you want to use.
Some of these are known as cold storage which is very important since computers are vulnerable to hackers, but we’ll come to that.
When it comes to desktop wallets they operate as a software which you must download, install and perform a bitcoin transaction. Some people do not find this option as practical, and newbies find it confusing but as far as bitcoin storage goes, this wallet is considered to have one of the highest levels of security, if not the highest. Bitcoin Core is the first and original wallet in this category but it requires at least 65GB of free space since the more bitcoin transactions occur, the more space the wallet needs to store the data. Other popular desktop wallets include Exodus and Electrum.
Bitcoin Mobile wallets are both accessible and practical. Many of these incorporate a couple of layers of security to ensure that your bitcoins do not get compromised. This is a really good idea if you plan on keeping a small amount of bitcoins here and the rest in a more secure place. This wallet can store the private keys for your bitcoin addresses, and enable you to pay for things directly with your phone. In some cases, a bitcoin wallet will even take advantage of a smartphone’s NFC feature, since you can pay with bitcoins with a phone tap without having to enter any information at all. Most popular android-based wallets in this category would be Mycelium, Breadwallet and Xapo.
Online Wallets are web-based storage which helps you keep your keys private online. Several such online services are available. The advantage of web-based wallets is that you can access them anytime and anywhere and it is easier and faster to make transactions in such way, regardless of which device you are using. However, the disadvantage is that unless you implement it correctly, the organization running the website can end up in charge of your private keys. If you decide to use this option, then you should apply the same method as with mobile wallets, keep smaller amounts here and bigger amounts in some other type of wallet. Popular Web wallets are Cubits, Coinbase and Blockchain.info.
Hardware wallets and paper wallets are considered as cold storage, and that is possible the best method to store bitcoins since it is usually the safest. Hardware wallet is the preferred method for many bitcoin holders. They are user-friendly and portable. The only issue with these is that hardware wallets exist in very limited number. These wallets are in fact dedicated devices that can hold private keys electronically and facilitate payments. You have Trezor wallet, Ledger USB wallet and KeepKey wallet.
The hardware wallet is intended for bitcoin holders who wish to maintain a substantial stash of coins, but do not want to rely on third-party bitcoin storage services or impractical forms of cold storage. Private keys remain in the device, which is also PIN-protected in case it falls into the wrong hands.
If you choose paper wallet then it is safe to say that you are safe against hackers since bitcoins are stored offline in this case. You as a user will have control of your bitcoins at all times. The only disadvantage here is that paper is easily destroyed and unlike hardware wallets, there is no way that you can recover it once it fades, gets torn or lost.
There are a number of tools that make it easy to create a paper wallet. The most popular of which is bitaddress.org. You should first, open the address in your browser, save the page as an HTML file to your desktop and then move it to a USB drive. From the USB we can move bitaddress to your offline computer or bootable operating system. This will provide the same benefits as the offline computer. Also, always make sure to keep your paper wallet in a secure place and always keep multiple copies.
Get your wallet today
To a new bitcoin user, this information might seem daunting, however it is of crucial importance to get you bitcoin wallet today. You might have heard of bitcoin losses due to hacks, malware, or perhaps a simply human error. But if you spread your bitcoins around you should have no worries because as long as you keep your wallet safe, your bitcoins will remain safe as well.