You must be willing to invest in bitcoins for the innumerable benefits and opportunities it has to offer. But at the same time, with benefits and opportunities like huge profits, very low fees, small contracts, asset distribution, and bitcoin mining, you cannot overlook the risks involved in the trading of this digital currency.
From financial losses to frauds and forgeries, the crypto world is a perfect example of, “Higher the risk, higher the reward.” In the digital-dominant world, to transfer money online is easier than ever – which is both for good and for bad. Good because the complexities of the functioning are almost nil and bad because the easy-interface makes your account prone to digital frauds like hacks, virus and Trojan attacks
When it comes to bitcoin, unfortunately, there are plenty of ways by which an individual can locate your bitcoin address, track your money and even violate your privacy. Money-making is certainly not a cake-walk in the world of crypto and above that, if you fail to safeguard your digital currency and keep your spending habits private, all your hard work will go in vain.
If that’s freaking you out, here’s a breather: it’s isn’t difficult to build a secure wall around your digital currency. There are just a few things you need to incorporate in your investing behavior and then you can sleep with the assurance that your money is only yours! Let’s begin:
1. Having Separate wallets for different reasons
If the discussion is about bitcoin, there is no upper limit on the number of wallets or bitcoin addresses one person can possess. The primary reason why it is always best to own separate wallets, instead of one common address with all your bitcoin holdings is because it will only make you more vulnerable.
You see, all your transactions are recorded in the public blockchain. So, if anyone has your address, he or she can quickly take a peek at your balance.
Long story short, for keeping your bitcoins safe having multiple addresses is important. Thus, make sure you have a separate address or wallet, for spending money, for savings, and also one for your payments.
2. Savings in a web wallet is a big NO
The functioning of bitcoins is not like your credit card, so if someone tricks you into a fraud, your money is gone. Of course, you can contact the police but the history says that nothing could serve the purpose.
Exactly why I am listing our next point that is: Don’t use web wallets to save money. Just because they are convenient, doesn’t mean you must use them for your bitcoin savings.
Upon researching, you will discover that there are several cases in which web wallets have been hacked and subsequently emptied. The ideal use of a web wallet must be just like a current account, that is, to temporarily keep some money that will be required for spending on various things.
Try and keep a small amount in it, because on the worst days, when you cannot prevent the account from getting hacked – you will still have a backup.
3. Your privacy is in your hands
Well, having separate wallets doesn’t really make you completely safe, however, it reduces the chances of the odds. Here’s why: With your transaction history, a hacker can discover the credentials of your multiple accounts – as coined by taint analysis.
It is simple, if you have two wallets, namely a spending wallet and a saving wallet, transactions will materialize amidst the two, providing a pretty clear signal that they are owed by the same person.
So keep this in mind and never, I repeat, NEVER share your financial details with ANYONE. It is as hazardous as sharing your OTPs that you receive on your cellphone while making transactions with your card.
4. Building upon a cold storage
Have you heard of Trojan horse attacks before? If not, conduct in-depth research on it and you will find out that bitcoin users are extremely vulnerable to it and have continuously reported such attacks.
This vulnerability is primarily because the bitcoin Wallet Applications save their data in predictable locations. Even though your bitcoins are stored safely in a wallet inside your computer does not imply that you are totally safe from these fatal attacks. Thus, here’s what you can do, instead:
Keep your wallet’s private key stored in an offline medium. This will prove to be an added layer of protection, that you definitely desire. It can be something really simple as a QR code or even a plain text file stored in a USB key.
Whenever you want to transfer your Bitcoin from an offline wallet to someplace else, you will have to manually scan the QR code or type-in the wallet’s private key into the application. Additionally, you must encrypt your private keys, but never, NEVER forget your password
5. Emphasize on backups
The above-mentioned points on the list discussed how you can save your bitcoin empire from other people. However, this point distinguishes from others because it recommends you to protect it against your own self.
But how will you harm your own wallet? By NOT backing it up.
If you are using a desktop to store bitcoin wallets, it must have a backup option. This way, all your public, and private keys are saved in a file and that is all you need to retrieve your bitcoin balance. The value represented by your bitcoin addresses is not stored in your wallet application but on your blockchain.
What makes this so important is, that now you will have a file containing your public and private key, which now can be saved anywhere. Flash drives, optical disks, portable hard drives, papers, or even in a cloud-based backup system. But yes, remember cloud-based backups aren’t a hundred percent safe, so encryption of your wallet files must be a priority.
Bitcoin surely is a wonderful platform for investors who desire lucrative returns. If you love taking risks, there’s literally no reason why you must not kick-start your crypto journey. However, at the same time, if you keep your security guard high, it will keep your returns safe and secure. Remember, it’s your hard-earned money at stake!