Crypto
How Can Bitcoin Investors Avoid Private Key Hackers
With the increasing popularity of cryptocurrency throughout the world, how to protect my bitcoin has probably become the most important question these days. In general, bitcoin is always considered safer than the traditional currency.
Making an online money transaction from bank to bank is always considered as risky. Making payments online through credit cards has also been identified as highly risky. On a sharp contrast, the online transaction of cryptocurrency, which is exclusively a form of digital currency, is considered as risk-free. However, nothing is completely secured.
Cryptocurrency holders should adhere to some simple techniques to keep your money safe. Basically, bitcoin is stored in a person’s digital wallet. Security for this digital wallet should be top notch.
If hackers get access to the wallet, storing your bitcoin, you could possibly lose all your money. It is to be remembered that once bitcoin transactions are made, they cannot be undone.
So, here are some security tips for you to protect your bitcoin or other cryptocurrencies.
How Do Bitcoin Wallets work?
In order to enhance the security of your bitcoin wallet, you need to understand the mechanism of the wallet. Many cryptocurrency holders do not properly understand how their crypto wallets work.
Bitcoin uses blockchain technology for encryption and storage information. It is not a physical commodity. It is basically an address on the blockchain, and this address possesses information related to your bitcoin.
Every cryptocurrency holders possess a unique key which has been used for unlocking certain bitcoin locations. The key is important and thus it should be protected in a reliable digital wallet.
So, in a way it has to be stated that wallets do not store your crypto coins, they store the unique key that helps you to access your bitcoin.
- Having a Backup Is Important
Regular backup of your bitcoin wallets will make sure that your bitcoin keys are safely stored. Generally, wallet backup files can be created in “.dat” format. Regular backup is required.
To ensure added security for your bitcoin keys, you must keep the backup data in different locations. For example, data stored in one computer may be hacked or spied.
Thus, storing backup data in different computers will ensure better security. All your bitcoin information could not be hacked, even though security of data on a few computers has been compromised. - Keep Your Wallet Software Updated
The software of your digital wallet, storing bitcoin keys, should be updated regularly. Updating the software has a lot of benefits. The first thing is obviously security. With the advent of time, different sorts of security threats appear.
To deal with new challenges, developers of the wallet software make certain changes to the software. Security has been enhanced and new security features are also introduced to counter the potential security threats. All these things will be available with the wallets of the users when they update their software. If you do not update, the new security features will not be there on your wallet.
Not just security features, new functional aspects are added to the wallets through the updates. As a result, these wallets become even more user-friendly. So, handling crypto coins will get easier. Nevertheless, security will be optimum. There is no way hackers would get a trace to your cryptocurrency keys when you update the wallet software frequently. - Choose Two Layers Based Security
Most of the cryptocurrency wallets offers two layers based security. At the first layer, you need to enter your login details. The login credentials generally consist of two things and they are username and password. It is important to keep the username and password remembered correctly.
You also need to change your password periodically. This will enhance security for your wallet account. The next layer of your wallet login should be verification of the login attempt through text message. At your registered phone number, you shall get a one-time password. This password should be entered to continue login. If this key is not entered properly, the login attempt will fail.
Since users have to pass two layers of security for such login process, this has been noted as a two-tier login. Most of the bitcoin wallets feature such login process. It ensures better security for the bitcoin keys. - Use Multiple Signatures
For bitcoin security, multiple signatures are getting popular quite rapidly. Multi-signature is a concept that involves approval of several people before finalizing a transaction. For example, both seller and buyers have to approve a transaction before it is done with bitcoin.
As a result, security becomes optimum. It does not give permission to a single server to conduct the transactions. This mode of transaction is quite popular among the cryptocurrency users. They search for the wallets which approve this type of transaction. - Check Bitcoin Wallet Encryption Process
Wallet information encryption is important for protecting the data stored in wallets. Different wallet developers follow different encryption methods. You need to choose a wallet that gives standardized encryption for your wallet.
If you do not get properly encrypted wallets, it will get difficult for you to maintain optimum security for your bitcoin keys. They could be stolen and misused. Different wallets offer different layers of encryption.
Before conducting a transaction, security checking has been done. A transaction will only be done, when all these security checking processes are completed. - Using Cold Storage for Storing Bitcoin Information
In order to store your Bitcoin information, you need to use cold storage devices. That means a portable USB drive is a good device where you can store your data. Pen drives or external drives are the examples of such storage units.
Having the information stored in the computer is not a safe thing. Any malware or potential security threats can get a trace to your bitcoin information. As a result, there is a chance of your crypto coins to get stolen.
Conclusion
Bitcoin is the new way of managing wealth. It is convenient and relatively more secure than conventional currency. Digital transaction of bitcoin is safer, though not fully protected from hacking related issues.
To keep your cryptocurrency keys safe, following the methods that are mentioned above is important.