Bitcoins — though are a lot safer than traditional banking firewalls and other security protocols that digital transactions comply with — are not entirely fool-proof. Looking back, one can cite several incidents, such as Mt. Gox, Pony Botnet, Silk Road 2, and more recently the Bitstamp attack that would encourage users to embrace caution. Since its inception in 2009, bitcoin continues gaining popularity steadily and currently functions as the main medium of more than 100,000 transactions daily, across the globe. In order to maintain the steady pace of bitcoin’s growth, it is essential that its security parameters are tightened and users also learn how to protect their bitcoins.
The Biggest Threats Against Bitcoin Safety
- Loss or misplacement of privacy keys is the biggest threat against bitcoin safety
- Storing bitcoin wallet on a computer that is affected by Pony Loader 2.0, a Trojan malware
- The irreversible nature of bitcoin transactions require users to be extra cautions while making a payment or transferring money, as manual errors would lead to deposition of the payment amount to an unknown recipient
- The loss or crashing of laptops or smart devices where the bitcoin wallet was installed
Tips To Keep Your Bitcoins Safe
- Bitcoin Cold Storage: The act of securing bitcoins offline is known as bitcoin cold storage. As the wallets remain disconnected from the Internet, they are less vulnerable to hacking. Users often complain about problems with accessing their cold storage wallets. In order to overcome this issue, it is suggested that users split the entire amount into two different storage systems, online and offline. While the online wallet should contain only a small part of the total amount for daily transactions, the offline one would contain majority of the sum. In the cold storage system, the privacy keys are also stored offline, which reduces the possibility of bitcoin misappropriation. As such, platforms that offer automatic deep freeze storage such as Belfrics are your best bets.
- Use Bitcoin Client That Helps in Changing Internet Protocol (IP) Addresses: Experts consider that by hiding their IP addresses, bitcoin users can reduce hacking attempts considerably. Installing a bitcoin client on your computer can be helpful as it automatically changes the IP address to a new one with each transaction.
- Backing Up The Bitcoin Wallet: Sudden hardware crash or computer failure in-between a transaction may lead to loss of money. Experts opine that backing up the bitcoin wallet data frequently can stop such accidental losses. Ideally, users should back up all the wallet.dat files and then safe keep them in more than one storage systems that should also be password protected.
- Escrow Services For Safe Transaction: Payment to fake merchants and fraudulent businesses may lead to the loss of bitcoins. If a bitcoin user cannot be entirely sure about genuineness of the person/business on the other side, then opting for an escrow service is for the best. Opting for an escrow service means that the buyer would send the bitcoins to the escrow service instead of sending them directly to the seller. Once the item is received, the buyer, then notifies the escrow service to finalize the payment by releasing the money.
- Wallet Encryption: If a bitcoin user is not in favor of cold storage system, then he/she must be careful about encrypting his/her bitcoin wallet/s. Experts are of opinion that password-based protection is not enough and the user need to opt for tools, such as DESlock+ to not only encrypt files with sensitive information but also the entire system or user space where the sensitive files, such as bitcoin wallet privacy keys, are located.
Your effort to protect bitcoins doesn’t require strong knowledge of encryption. By following the above-mentioned tips, you can keep your bitcoin wallet safe from hacking attempts.