Besides providing the best way to buy Bitcoin securely, cryptocurrency exchanges offer additional features, such as digital asset custody. While many users feel comfortable storing all their Bitcoin in a corporate wallet for safekeeping, others prefer to withdraw their funds to a cold wallet to have more control over them and, theoretically, keep them safe. There’s no denying that cold wallets offer unparalleled security, but they eliminate the need to rely on a third party for the safety of digital assets, so you must take full responsibility and implement the necessary precautions.
Your Bitcoin is as safe as the method you use to store it. For greater amounts, it’s a good idea to withdraw most of your holdings to a Bitcoin wallet so that you retain control of the private keys and have complete power over your finances. There are a handful of tips you can follow to keep your stash safe, such as:
Table of Contents
Go With a Reputable Wallet Provider
Long before you transfer your Bitcoin from the exchange to a wallet, see to it that the wallet provider has a good reputation in the industry. If the wallet provider has a poor reputation, there’s the risk of security breaches or even the loss of funds on account of inadequate security measures or insufficient customer support. Reading online reviews will help you get a good idea about the company before parting with your Bitcoin, so get a sense of how popular the wallet is in the crypto community. Equally important is to evaluate the security features of the wallet, such as secure key storage and security protocols.
The cryptocurrency wallet landscape has become congested with time, which inevitably impacts the decision-making process. Choose a Bitcoin wallet that is well-established and well-developed to ensure your funds don’t fall into the wrong hands. Software and paper wallets are free, but hardware wallets require a lump sum investment. Manufacturers such as Ledger offer USB-like devices that come pre-installed with security layers and encryption features. Nobody can access Bitcoin unless they have the PIN code. A normal USB drive isn’t secure for transactions as it opens up countless attacks.
Be Careful Where & How You Buy Bitcoin
Buying Bitcoin, whether as an investment or for interacting with blockchain applications, is inevitable. It goes without saying that you shouldn’t buy cryptocurrency from just anywhere. All major exchanges aren’t created equally. The most commonly used metric to assess the value of a platform is trading volume, which highlights the number of digital assets exchanged between buyers and sellers during trading hours on any given day. Be skeptical of complicated buy processes, high exchange rates, or aggressive offers. Even if the deal looks great at first glance, don’t make a snap decision. Just like everything else in life, if it sounds too good to be true, it probably is.
Encrypt Your Wallet with A Strong Password
If your Bitcoin wallet offers the option to set up a password, use it as an extra layer of security for your account to make it harder for unauthorized users to access your funds. Don’t use phone numbers, birthdays, names, or titles of favorite movies or books. It’s recommended to use a combination of uppercase and lowercase letters, numbers, and special characters. Longer is always better, so the password should be at least 12 characters long so it won’t be easily compromised. The password will be encrypted and stored securely via advanced encryption algorithms.
Creating a strong password is critical for protecting your Bitcoin. If you don’t want others to break into your account and steal your hard-earned digital assets, use a password. The password isn’t less technical than the seed phrase, as it’s used to secure the wallet application. Speaking of which, you must keep the seed phrase offline or hide it in a secure location. A piece of paper can be stolen, read by someone else, misplaced, or thrown away by mistake, so it’s recommended to make a copy every so often to maintain the integrity of the ink.
Use A Secure Internet Connection
Blockchain technology is transparent and secure, but it has inherent flaws that cause it to be less effective. Because of this, it’s recommended to use a secure Internet connection, i.e., one that uses encryption protocols to safeguard the data being transferred. If you have a Bitcoin wallet on your laptop or tablet, use your phone’s hotspot rather than trying to connect to a public Wi-Fi network to access your account. Using a VPN increases your security by masking your IP address and preventing scams like phishing, to name but a few.
Be Wary of Scams & Phishing Attempts
Thieves are incredibly creative when it comes to luring unsuspecting victims into a trap. A phishing attempt occurs when someone pretends to be someone else, such as a company, to convince you to hand over sensitive information. For example, they might try to get hold of your Bitcoin wallet’s private keys by sending an email that urges you to log into your account. The most prevalent type of attack is ice phishing, where a malicious actor tricks you into signing a transaction that opens access to the Bitcoin wallet so they can steal your funds. Remember that you hold ultimate responsibility for everything you do.
Generally speaking, you shouldn’t sign into any account after clicking a link from a source you can’t confirm is authentic. Examples are emails, messages on social media, airdrops, and texts. As is the case with hot wallets, threat actors use social engineering techniques to get to your Bitcoin. Scammers convince you to connect to a fake website so that they can withdraw the Bitcoin from the account. This is precisely why it’s so important to be careful with your online activity. Even if a cold wallet is more secure, that doesn’t mean you should let your guard down.
All in all, a Bitcoin wallet is prone to various risks, so it can be hacked as long as there’s any vulnerability that a malicious actor can take advantage of. Make your wallet more secure by implementing the best security practices.