As the cryptocurrency market grows, the number of online hackers grows, too. News every month says that some bitcoin owners lost their coins online without doing trading or purchasing anything using their bitcoin accounts. Some accounts have been hacked, others have invested in a scam platform.
Bitcoin has been up in the market for years now and is continuously growing. If you are new to the cryptocurrency world, one of the basic and most important thing you should consider and learn is to how to securely store your bitcoins. And if you have been in the business for years now, the most important question you have to ask yourself is that, “Is my bitcoin storage still safe and secure”?
But how do Bitcoin Wallets Work? A Bitcoin wallet is a software program where bitcoins are stored so technically bitcoins are not stored anywhere. The only things that you get a hold of is a unique key that unlocks a specific bitcoin location, and that’s what you need to be protected at all times by storing it in a cryptocurrency wallet. There is a various form of Bitcoin wallet which are desktop, web, hardware and mobile wallets.
Desktop Wallets are installed on a desktop computer and provide the user with complete control over the wallet. It enables the user to create a Bitcoin address for sending and receiving the Bitcoins. They also allow the user to store a private key. A few known desktop wallets are Copay, Armory, Bitcoin Core, Electrum and etc.
The most secure wallet is the Hardware wallet as Bitcoins are stored on a physical piece of equipment, generally plugged into a computer via a USB port. One disadvantage of it thou is the immunity on virus attacks that could lead to the inability to access storage.
A Mobile Wallet enables a user to pay as well as receive payment using a mobile device which is delivered through several payment processing models such as the following:
- Mobile-based Billing – A user sends or receives payment through a mobile service provider.
- SMS-based transactions – Transaction is initiated by sending an SMS shortcode. Payments are credited or debited from the bank account, credit or debit card or any mobile service.
- Mobile web payments – It allows a user to send and receive payments via a mobile application.
- Near-field communications (NFC) - is a set of communication protocols which enables special hardware built in a mobile device through a payment processing terminal
Lastly, Web Wallets allow you to use Bitcoins from any location, on any browser of your choice and on any compatible mobile device. This thou should be done with utmost care since it stores your private keys online.
Bitcoin has become one of the modes of payments on E-commerce and other online platforms, making transactions easier and faster. With these features come a high level of security.
You should always be very careful when using your wallet in making transactions online. Be mindful of the online platforms where you store your bitcoins, too. There are new online exchange platforms that do not allow two-factor authentication, hence, security is at stake. Bitcoins are good as cash when used on online transactions so spend them wisely and keep them in a safe platform.
Sometimes no matter how much secure a wallet is, it is always safer to create a back up your wallet to protect it from computer failures and human mistakes. Any backup thou that is stored online is highly vulnerable to scammers and hackers online so make it a practice to encrypt backups and do regular backups.
Forgetting something is fine but forgetting your password is not. Always make sure that you write passwords that are easy to remember because forgetting may lead you to permanently losing your funds. Always use a strong password that is easy to recall. Strong passwords are usually harder to remember, so you should take care of memorizing it.
Always keep in mind to always update your software. Using the latest version of your Bitcoin software allows you to receive important stability and security fixes and prevent problems of varying severity. Installing updates for all other software on your computer or mobile is also important to keep your wallet environment safer.
Bitcoin includes a multi-signature feature that allows a transaction to require multiple independent approvals to be spent. Web wallets also provide multi-signature wallets which allow the user to have control over their bitcoin and prevent them from being compromised.
Bitcoins can be suddenly lost forever if you don't have a backup plan for your peers and family. If none of your friends or family members know you’re password and you are suddenly gone, there is no hope that your funds will ever be recovered by anyone. Thinking about these matters can be of huge difference.