6 Steps to Securing Your Bitcoin Holdings
In 2013, a host on the Bloomberg Television show 12 Days of Bitcoin, gave a couple of guests gift certificates loaded with Bitcoins worth $20. By accident, the host exposed the QR code with the private key to one of the wallets, on camera. It was an HD broadcast, and the shot showed a close-up of the QR code for several seconds. Within minutes, someone watching the show used the code to steal the money. It was only a stunt to demonstrate a lesson in Bitcoin security, however; the thief promised to pay the money back.
There are plenty of ways in which anyone can lose their cryptocurrency if they don’t practice good security. Fortunately, you don’t need much technical understanding of how cryptocurrency works in order to keep your holdings safe. All you need is a little common sense. What follows are tips on the rules to follow to keep your cryptocurrency safe.
Use secure passwords
If you’re serious about your cryptocurrency security, you need to do more than set a password that is 8 characters long, and that contains an uppercase letter and a number. For today’s hacker threats, it’s important to set a password that has 40 characters, and that contains symbols, as well.
While you can use a password-generating tool such as the one at passwordsgenerator.net, you can also make a great password by writing out a memorable sentence, and switching various letters for numbers or symbols that bear a similarity. The symbol @ can replace a, for example, and the number 7 can replace the letter t. Such a password would be complex, but it would be easy for you to remember.
You can also use password management software to remember your passwords or keep your passwords on an encrypted thumb drive.
Finally, it’s always a good idea to use a different password on every account that you have.
Use secure two-factor authentication
Two-factor authentication is more secure than access that’s controlled with just one password. With two-factor authentication, the service that you try to enter sends you a one-time password for use with the access attempt. It’s important to remember, however, that it isn’t enough to use two-factor authentication that sends you a password on your phone. Hackers are adept at calling up phone companies, impersonating the people whose accounts they wish to take over, and gaining access to their phone numbers. To enable secure two-factor authentication, you need to use an app like Google Authenticator, or an encrypted USB key like YubiKey that you plug into your computer each time you sign into your account.
Use whitelisting for your IP address and wallet
When you trade on exchanges, it can help to use multiple layers of security. When you whitelist your IP address, you make sure that whoever deals with the funds that you have on your exchange, can only do so from the IP address that you set. Wallet whitelisting is a good idea, as well — you share the public key to one of your wallets with the exchange. This way, you’re only able to withdraw cryptocurrency from the exchange to that wallet. Thieves won’t be able to transfer your funds to their wallet.
Use a good VPN when you’re on a public Wi-Fi network
If you connect to a public Wi-Fi network with a computer that has information about your cryptocurrency accounts, you run a risk. If you do need to connect to public Wi-Fi, it’s important that you do so through a good, paid VPN that gives you a secure, encrypted tunnel through which to connect to your cryptocurrency exchange. While it will set you back $5 or so a month, it’ll give you significant security.
Avoid cash in a trading account
Exchanges are prone to risk. They can be hacked. For this reason, it’s a good idea to only keep funds on an exchange that you need there to trade. Funds that you plan to hold on to for a long time without trading should sit in an offline wallet. You can use a hardware wallet, or simply write down your public and private keys on a piece of paper, which you keep safe.
Make two backups
The fact that cryptocurrencies depend on decentralized blockchains makes them extremely secure. There is no one point of failure. It’s a good idea to make sure that your own storage of funds has no single point of failure, as well. You should get a couple of flash drives, and store all your keys and passwords on them. Then, you should encrypt them. Windows has inbuilt functionality that allows you to encrypt drives.
Finally, it’s a good idea to prepare a digital will and enroll in identity theft protection, we like IdentityIQ for people investing in Crypto. People do pass away, leaving no clue to their families about how to access their cryptocurrency funds. You should decide who will inherit your cryptocurrency funds, make sure that they have knowledge of where your encrypted flash drives are, and give them the password that they need to access them.
Your cryptocurrency holdings can be valuable. It doesn’t make sense to be lax about security when you have crypto coins that you hope will one day make you a millionaire. These steps don’t take much time to perform. They can make sure that your investments stay safe, however.