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Play Safe — Keeping Your Bitcoin Wallet Enchained

Avatar Gautham 5 years ago

In recent days, Bitcoin is plagued by frauds and hacks where many Bitcoin exchanges were hacked and millions of dollars’ worth in Bitcoin was lost to hackers. In order to understand the magnitude of Bitcoin thefts, you do not have to go beyond MtGox. MtGox was a Japanese Bitcoin exchange based out of Tokyo and it was responsible for over 70% of all Bitcoin transactions across the world. In early 2014, MtGox was the target of multiple DDOS attacks and hacks where the hackers stole over 750,000 bitcoins valued at close to $575 million, leading to the downfall of “Mount Olympus” of Bitcoin. When something that big can fall, there is no guarantee that someone will not attack your bitcoin stack and steal from it.

Unlike fiat currency, Bitcoin is not backed by any Central bank or a clearing house that can handle, monitor and/or take responsibility for fraudulent charges or violations on the Bitcoin network. All these factors makes it almost impossible to track and recover stolen bitcoins. It is upon the users to take all necessary precautions to prevent such thefts.

Usually hackers target and steal from Bitcoin exchanges and wallets. You can safeguard your bitcoins by following a few simple steps, which might add a couple of extra steps while performing transactions, but will save you from losing your hard-earned bitcoins.

Enable Two Factor Authentication for your wallet

By enabling two-factor authentication, you will be required to enter a One Time Password/Pin (OTP) while accessing and conducting transactions on your wallet. You will receive OTP on your registered device and any action will be authorized only when the password entered matches the generated OTP, thereby preventing any unauthorized transactions.

Don’t authorize the browser to remember your credentials

The most basic best practice for internet usage is applicable for Bitcoin too. Don’t ever authorize the computer to remember your wallet credentials while using a device that is accessible to other parties.

Use multi-sig feature wherever possible

Multi-sig feature requires your bitcoin transactions to be authorized by multiple parties or devices. Multiple signatures can come from multiple parties or separate devices owned by the same person. Approval from all the parties completes the public key required to conduct any bitcoin transaction. You can use any one of the many wallet services offering multi-sig feature.

Keep your Bitcoin stash in Cold Storage

The best way to keep your bitcoins away from prying hackers is by keeping it away from the internet. It is essential especially if you have loads of bitcoin with you. You can keep a minimum amount of bitcoin required for immediate transactions in an online wallet and store the rest in an external storage device like USB drive, paper wallet, physical bitcoin or an offline bitcoin hardware wallet.

It is better to be safe than sorry.

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