If you are going to be investing in Bitcoin, one of the first things that you should consider is how to keep your crypto wallet safe. In this cryptocurrency security guide, we will answer some of the common questions of securing your Bitcoin wallet.
Where should I store Cryptocurrency?
When you’re going to be investing in bitcoin, it’s likely that you already know about wallets. What you may be surprised to know is that there are differences in wallet types. An offline Bitcoin wallet is a system that is different than an online Bitcoin wallet. Understanding how to keep my bitcoin wallet safe first starts with understanding the differences between an offline wallet and an online wallet.
Online bitcoin wallets explained:
An online bitcoin wallet is characterized by any device that is connected to the Internet that allows for the trade of Bitcoin. You could have wallet storage in a cryptocurrency exchange, in a digital wallet that you keep on your smartphone, or on a wallet that you use on your desktop device.
As long as that wallet is connected to the Internet and able to send and receive Bitcoins, this leaves the coins that are stored in that wallet to be vulnerable to various hacks. A desktop wallet is an online Bitcoin wallet that is least likely to fail. Keeping your Bitcoins stored in an online wallet that is run by a service or on a cryptocurrency exchange does pose a risk. These are areas that quite regularly get hacked and manipulated by individuals that are out to steal your funds.
Transferring any of the funds that you have invested in from a cryptocurrency exchange when you don’t plan on training them is usually a great move for securing your cryptocurrency investment. A desktop wallet that is connected to the Internet is one form of security but choosing an offline bitcoin wallet can be a far better option for security.
Offline wallet explained:
Offline wallets can take on several different forms. An off-line wallet and essentially removes the access to your bitcoin wallet from any online sources and ensures that it can be far less susceptible to hacks. If your online wallet ever got infected with malware or a virus that was designed to steal your keys, someone could access your funds even if it is stored often of exchange in your encrypted wallet.
Using an offline wallet can make sure that your wallet and your funds are secured because they won’t be connected to any online source. Offline wallets are also commonly referred to as cold storage and they are a tool that almost every cryptocurrency investor needs to use in order to protect their funds.
How to make a bitcoin wallet offline?
There are several ways to take your Bitcoins offline. By using your digital wallet that is connected to the internet, you can transfer your coins to a series of services or disconnect your wallet to secure your bitcoins regularly.
A desktop wallet:
The easiest method for putting your bitcoins into cold storage is to have a dedicated platform that is not going to be connected to the Internet. Keeping a separate desktop that you use only to transfer bitcoins to and then shut off can improve security. Online wallets are easily accessed from anywhere in the world if they get infected with the right malicious software. Having your device offline can help to protect it from anyone who might be trying to steal your funds. Even if your digital wallets get hacked, you can have an off-line backup. It just may be important to use the desktop outside of your infected network to initiate any transfer of Bitcoins if you have been compromised.
A hardware wallet:
This is a far more secure path that you can use for an offline Bitcoin wallet. In determining an answer to “where should I store bitcoin?” It’s important to look to the community. A large number of investors are using hardware wallets today to put their funds into cold storage conveniently.
Hardware wallets typically resemble USB sticks and you can carry them around with you at any time. The hardware wallet has no information link to it and there’s no identifying data that can be compromised. The wallet has its own seed phrase to unlock your funds which adds an extra level of security when you do decide to plug the USB device into an online platform to recover your coins. The only downside to using a hardware wallet is that you could lose all of your Bitcoins and the chance to recover them if you ever lose the device. Keeping the wallet in an extremely secure place is what is important to make sure that you can recover your Bitcoin.
A hardware wallet is extremely resilient to malware or any other type of attack because of the extra levels of security and because it’s always kept offline.
A paper wallet system is another popular way to secure Bitcoins. With this service, you can have a specific tamper-proof sticker code that can be scanned to verify the value of a physical bitcoin. These items are available at Bitcoin ATM’s for exchange and purchase. A paper wallet is a system that is kept offline so it is tamper-proof. You will have to keep a secure hold of your paper wallet and the code on it. It’s also important to note that many of the services that utilize off-line paper wallet exchanges do charge some premiums to handle exchange values as well as for the manufacturing of the sticker.