Cryptocurrency Security 101 – Keeping Your Bitcoin

bitcoinThe brouhaha over Bitcoin and cryptocurrency security is getting a little bit out of hand. If you can’t store them in online wallets since they can be easily siphoned off by hackers, where in the world should you keep them?

 

And this little problem here folks, is the reason why those uninitiated in the world of cryptocurrency are filled with animosity towards Bitcoin and its ilk. Due to the string of insolvencies suffered by online wallets such as Mt. Gox, people are now quite hesitant to invest in cryptocurrencies. This has caused the dramatic drop of Bitcoin’s value, which has seen it a high of $1000+ at the end of last year, to its current value today of $450. another study done by Dell Secure Works has stated that there are at least 100 malware and viruses in circulation that have
But what most people don’t know is that there are a lot of ways with which you can safely store and secure your bitcoins. Here are some guidelines to follow:

1. Avoid online wallets and exchanges altogether

 

For people who like to buy stuff from the internet using bitcoins, online wallets are the most convenient form of storage to use. They can easily access their bitcoins, or buy and trade them when necessary. But as Mt. Gox has shown, if it’s online, it’s hackable.

2. Consider using desktop wallets

 

Desktop wallets store your bitcoin private keys on your computer or mobile device’s hard drive. It’s not connected to the Internet- hackers need to take control of your whole machine before they can get at your bitcoins. However, this kind of storage is still very much at risk from keyloggers (software that record your every keystroke) and malware that specifically collect cryptocurrency information from your computer.

3. Store majority of Bitcoin investments in ” deep cold storage”

 

Deep cold storage involves placing the bitcoins in an encrypted wallet stored on a portable hard drive. This hard drive can then be stored in a secure place such as a personal safe or a safety deposit box. This kind of storage method is easily the safest, since a potential bitcoin thief will need to get access to the physical hard drive itself plus the password needed to unencrypt the files.

4. Keep your wallet software updated

 

Do take note that the Bitcoin system is pretty young, and its architecture is still constantly in the process of being updated for bugs and fixes. Make sure to always download the latest updates for your wallet software and apply them as soon as possible.

5. Use another level of encryption to protect your wallet

 

While wallets have their own system of encryption in place, you can never be so secure. There are specialized software out there (e.g. MacGPG for Mac users) that put another layer of encryption over the wallet itself. Another option is to put two-step authentication on the wallet. This gives you another layer of protection since a second token key (usually stored on a separate USB stick) is needed to authenticate the user’s information.