From the moment you begin acquiring Bitcoin or winning them on Stake, bad actors in the world want to separate you from them. Hackers frequently steal funds from exchanges and other online services, while malware and other security hazards illegally capture the funds of everyday users.
When safely storing your Bitcoin, you first need to understand a few things about the design of the Bitcoin system.
Cryptography is almost as old as human language itself, and at its heart simply means securing a message or piece of information so that only the intended parties are able to access or understand it.
Cryptography has been vital to computer systems from very early on — in fact, one of the first computers in the modern era was dedicated to breaking German cryptography, the Turing machine.
Cryptography has a lot to do with Bitcoin, which uses a form called public-key cryptography. For our purposes, a Bitcoin public address can be understood as a public key. Most cryptocurrencies today use similar systems, and many, including Litecoin, use the same system to generate 64-character addresses.
Every public key or address is associated with a corresponding private key. The private key can be used to access any funds allocated to a public address. As such, securing your private keys is incredibly important. Custom addresses can be generated using tools like Vanitygen, and these are fine so long as the private keys generated are protected.
This makes storing bitcoin secure and allows for you to enjoy hassle-free storage.
Securing Private Keys
Most Bitcoin wallets have a built-in password function, and such basic security can go a long way to preventing Bitcoin from being lost. However, dedicated malware and hackers will go to great lengths to get at your coin stash, so taking as many precautions as possible is recommended.
- Rules for Securing Private Keys
In general, it’s best to avoid reusing addresses when you can. The less an address is used, the less likely it is to be compromised. However, this is not always possible. As such, never store your private keys in plain text. Anywhere, for any reason. This means that the use of a cryptographic vault for the storage of private keys is ideal. This is if you even take your private keys with you. A more ideal situation is to simply send the funds stored on an address to the new wallet over the network, thereby eliminating your need for the old private key.
- Use Secure Computers
- Any computer you send and receive Bitcoin with should be as secure as you can make it. If you use a commercial operating system like Windows or MacOS, some form of virus detection like Malwarebytes or Avast is a must, and it is imperative to keep your system up to date. Outdated Windows computers are the biggest target online.
- Don’t Keep More Than You Need In a Hot Wallet
If you have a lot of coin, why keep it all in one place? That makes the potential loss a lot greater if all your security efforts fail. For coins you will not need immediate access to, a service like Bitaddress.org can help you create a secure, offline address. This is the private key to which you can later import into your hot wallet as needed.
- Minimize Mobile Usage
Mobile wallets are fun, but it’s simply insane to keep more value on a phone than the phone is even worth. Try to minimize the amount of Bitcoin kept in mobile wallets like Mycellium so that if your phone is lost, stolen, or falls in the toilet, your funds are relatively secure.
Do not rely on online services
Online wallet providers are simple and easy to use, but one of the key tenets of Bitcoin is being your own bank. While Stake takes every precaution to protect your account and offers you fine and dandy tools like 2-factor authentication to protect your account, compromise is always possible.
2-factor authentication, in simple terms makes absolutely everything about storing bitcoin easier and safer.
More often than not it will be you who is compromised, rather than the service in question. Have the most fun at Stake by only keeping the funds you need to play with on your account, and keep the rest in a more secure location, such as your computer.
For people who have enough Bitcoin to justify the expense, hardware wallets are a beautiful way to protect your bitcoins, and the manufacturers go to great lengths to support their customers. Here is a list of competing hardware wallet solutions: