How to protect your Bitcoin wallet from theft and fraud

Bitcoin and the whole cryptocurrency ecosystem resemble a ‘cyber wild west’ right now.

You need to carefully look after your Bitcoin wallet. A lot of people are intrigued by the novelty of cryptocurrencies and want to grab a piece of the action, but few fully grasp the bigger picture. This opens the door to those looking to take advantage of newcomers.

Therefore, theft and fraud schemes keep popping up. As Bitcoin is a decentralised asset, compared to fiat currencies, there is no central authority to watch over transactions. As a result, Bitcoin holders need to take additional measures for protection and security. In the end, it is our responsibility to secure and protect our wallets from illicit access.

What is a Bitcoin wallet and how does it work?

If you want to receive, store or send Bitcoins, the first thing you need to do is get a Bitcoin wallet. Technically speaking, there are no actual Bitcoins stored in a wallet, since Bitcoin is a network with lists of immutable transactions. Instead, a wallet stores a private key, a secure digital code known only to the owner. This private key is the ‘connection’ between its owner and a public key or a series of public keys (numeric codes associated with a certain amount of Bitcoins).

Hardware wallets

You can always store Bitcoin on a hardware wallet – a safe and ‘tangible’ solution. Manufacturers like Trezor and Ledger offer various models of USB-like devices. They come with pre-installed security layers and encryption features.

Keep your private key offline

One solution to safekeeping your wallet is to take your private key off the grid and keep it in the ‘real world’. Simply writing down your private key on a piece of paper will work, while not saving it on any electronic devices. Make sure you keep it in a dry place, protected from heat and direct sunlight, to avoid deterioration.

Always Use A Secure Internet Connection

Most public networks are vulnerable and have security flaws. If you have a Bitcoin wallet on your laptop, try using your phone’s hotspot instead and avoid connecting to public networks at all costs when accessing your wallet.

The best thing is to use only home or well-known networks, where you are certain connections are not being easily exposed to security flaws.

Use good and up-to-date antivirus software

While Windows users usually are exposed to a wider variety of malware, any other operating systems have its share of malicious programmes. Check if your computer has an up-to-date and reliable antivirus software installed. Since most cyber attacks use viruses and malware to access and tamper with your device, it is important to do a proper device scan, before installing the wallet.

Remember to update your software on time, to keep you protected from the latest malware programmes.

Do not access unknown or shady looking links

Be careful with your online activity and always check the link of the site you are on if something feels strange. Internet scammers can clone entire websites and use almost identical URL addresses to the authentic ones.

If you use an online wallet or a similar service where you are required to enter the private key, make sure to verify if the website address is the authentic one.

Use a strong password for your online wallet

If you use an online wallet, be careful when choosing your password. Avoid using phone numbers, birth dates, names or favourite movies. Instead, go for an alphanumeric combination that only makes sense to you.

Never give away your private key

Private keys are your’s only. Do not share them with anyone and do not ask for somebody else to make transactions for you. Ignore all proposals or requests that involve you sharing your private key to a third party or person.

Keep a separate wallet for day-to-day transactions

If you need to make small daily transactions, a good practice is to create a separate wallet that you can top up when necessary. There is no limit to how many Bitcoin addresses or wallets can be created.

Sorting your transactions and keeping the most important ones separately, will improve the safety of your whole portfolio.

Use two-factor authentication for online wallets

Most online wallets have a two-factor authentication and you should always use it. It is a simple but effective security measure.

Always check the Bitcoin address

When making transactions, you should always pay close attention to the recipient’s address. There are malware programmes that can ‘intervene’ when you copy paste a Bitcoin address and change the pasted output to another address. If you are not careful, you will end up sending your Bitcoins to someone else.

Back up your digital wallet

A back up will allow you to access your wallet in case you lose your device (losing your laptop, PC failure or other incidents). Choose either a different or a safe location for your backup. In case your device is stolen, you can restore access to your wallet with the backup file. As a precautionary measure you can move the funds to another wallet.

In the end, you are solely responsible for the security of your Bitcoin wallet. The cryptocurrency scene is constantly evolving and security systems are improved. Take all the necessary safety precautions and stay up-to-date with the latest security improvements and updates, to keep your Bitcoin or any other cryptocurrency wallet away from ill-intended parties.

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