Having an account in physical banks is like keeping your money in a walled garden. It is safe because it is the bank’s responsibility to take care of your money once you’ve made the deposit in to your account. If something goes wrong (such as bank robbery), you have nothing to worry about because the bank is saddled with the security and certainty of your funds. The banks often have huge deposits with the apex bank which will be used if there’s a problem. If your account has some issues, you can give your bank a call for clarifications or file a complaint. In essence, your bank is responsible for your funds.
Conversely, things are different when it comes to cryptocurrencies. If there’s a problem with your wallet address, you cannot call anyone to fix it because you’re in full control of your money. In essence, you’re your own bank! Along with that exciting prospect is the responsibility to ensure the security of your funds.
The problem many bitcoin beginners usually have is the difficulty to transit their mindset from the traditional banking system to the bitcoin system. As a result, many have lost their money because they did not pay close attention. Unlike brick and mortar banks where the funds are seen and transactions can be traced, once your bitcoin is gone, IT'S GONE! There’s nothing that can be done about it.
There are plenty ways people can track you, your spending or violate your privacy online. One mistake can be fatal. For this reason, it is important you protect your bitcoin and keep your spending private. Below are 5 tips to help you protect your bitcoin.
This is probably the most important one. Early last year, a friend of mine lost all the bitcoin he owned to hackers. The first thing I asked him when he called me was "did you have 2FA enabled?" His answer was "no". I tried my best to console him, but his bitcoin was gone forever. There have been similar cases like that.
Having to enter a username and password to login is referred to as single factor authentication. Two Factor Authentication is an extra layer of security to the basic login procedure that requires just a username and password.
If you do online transfers, picture 2FA as your hardware token. For someone to gain access to your bank account to make a transfer, the person must not only have your user ID and password to login, but must also find a way to physically have access to your hardware token device.
For most cryptocurrency wallets, you have the option of using Google authenticator or having a one-time password (OTP) delivered as an SMS to your registered number. That way, even if your username and password is compromised, the hacker would have to be in possession of your phone with contains the 2FA to be able to access your account. I can decide to post the username and password to my wallet and you would not still have access to my wallet, all thanks to 2FA.
It would be very unwise for anyone in this day and age not to enable 2FA on their wallets.
If you intend to buy and use a lot of bitcoin, keeping separate wallets is a smart move. Keeping your entire bitcoin holding in a single wallet exposes your wallet to high security risk. A single successful attempt by a hacker at your wallet spells doom.
Fortunately, there are no limits to the number of wallets you can create. In fact, we advise those who actively use bitcoin to have at least three accounts. I have accounts on Blockchain, Coinbase, Paxful, Xapo, and so many more. In this way, you will successfully minimize the risk of losing all your bitcoin. Remember the adage that says, “Do not keep all your eggs in one basket?”
Your wallet address (public key) can be likened to your bank account number while your private key can be likened to your PIN. Just as you would with your bank account and PIN, never share your private key with anyone.
In addition, you must note that you do not have full control of your bitcoin if you don’t have direct control of your private key. If you bought bitcoin from an exchange but you’re yet to transfer them to your wallet, you have no full ownership or control of the bitcoin yet.
A cold storage, also referred to as an offline wallet, is the one of the highest security measures for saving your bitcoin. When you use cold storage, you’re storing your coins in a secured place that is not connected to the network, protecting you from hackers.
In addition, we suggest that you encrypt your private keys. Encrypting your private keys makes it impossible for people to use your private keys even if they discover it without your encryption password.
While the above tips help protect your bitcoin from others, backup helps you protect your bitcoin from yourself. How? Even if your private key is saved n a secure place, you could still lose it due to computer failure or your own mistakes. Backup can also help you recover your wallet when your device is stolen or your computer becomes faulty if you keep your wallet encrypted.
All in All
Bitcoin makes it easy to send money wherever and whenever you desire. With this great possibility come genuine concerns about securing your bitcoin. With the digital currency, it is your duty to adopt good measures to protect your money. If you’re a bitcoin user, the tips above are a good place to start.
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