Bitcoin is the world’s first digital, decentralised, peer-to-peer cryptocurrency and payment network. Bitcoin has revolutionised the payment industry by building a trustless system that doesn’t require a trusted third party to make payments worldwide. This trustless system is known as Blockchain. Bitcoin is the first application of Blockchain and this opens up the door to build numerous other applications on it.
Based on mathematics, the concept of bitcoins promised a free currency, however, the same has often been misused by the hackers and cyber-criminals to demand ransom. The fact has been made evident by the WannaCryRansomware that hit the commercial world like a storm. This makes matters more precarious, since in India, bitcoins are only gaining momentum as the latest, cash-free, frontier for payments and investments.
However, not all is lost! When it comes to safeguarding bitcoins against falling prey to cyber criminals, there is a lot that one can do. By becoming aware of the security alternatives and exercise the same, users today can continue to smoothly transact or invest in bitcoins.
To the same end, here’s discussing the easiest ways in which users can safeguard their bitcoins.
Opt for Cold wallet
Cold wallets are offline wallets which are stored in an offline vault and have no access to internet. Always use different wallet for various different type of transaction. It is advisable to split up your bitcoin holdings between numerous wallets.
Backup and encrypt your wallet
Always remember to backup and encrypt your wallet. If one of your backups is hidden and unencrypted, someone finding it would instantly know your private keys. This is essential if you are using web wallet and mobile wallet. Also backup and store your hardware wallets at multiple GEO locations. It is extremely important to ensure that your backup is available in 2 to 3 different places like a trusted friend’s home etc. Never store your wallet address and the encryption key in the same place.
Consider Hardware wallets
Hardware wallets are special type of bitcoin wallets which holds bitcoin in secure hardware devices. In these wallets, private keys are stored in protected part of microcontroller and also in encrypted form which cannot be translated into plaintext outside of device. These devices are also malware protected.
Advanced-level security with Armory
This is not suitable for a cryptocurrency beginner but Armory has been a very good open source attempt (Python based) to showcase the robust abilities of bitcoin wallet systems introducing some very cool, secure & unique features such as Extended Public key based HD (watch-only/ receive only) wallets for enterprises payment receipts, Fragmented Backup mechanisms, Multi-signature Lockboxes & Custom deterministic wallet formats.
Multisignature wallet—making wallet virtually hack-proof!
Multisignature wallet is an excellent way to secure your Bitcoin. In any single key storage solution, there is only one piece of information a hacker needs in order to steal bitcoins but with multisig there are multiple keys which are never on the same machine. This makes the wallet virtually hack proof.
Update your software
If you are using any type of web wallet or mobile wallet make sure the OS, applications and wallet software are up to date or better, check the updates regularly. It is advisable to not use mobile wallets or at least not keep lot of bitcoin in mobile wallets.
Don’t forget about two factor authentication
If you intend to use web based wallet, then ensure that 2FA is enabled so that there is an additional layer of protection to the wallet that is holding bitcoins
Adopting multi-signature addresses by default with focus on enhancing security and privacy by encouraging not storing or losing hold of your private keys either encrypted or unencrypted to any custodial service.
By following these protocols, users can continue to transact in bitcoins, without fretting over a ransomware attack or a security breach. As a practice, become aware of the latest security features and updates for ensuring optimum security. Always opt for a reliable bitcoin exchange while buying or sending bitcoins.
The author is CEO & Founder, Unocoin