You may perhaps have invested a good amount of your savings in bitcoins. It is a different currency format that is not backed by any bank or government. Rather, it is computer code generated. It is also known as virtual currency or cryptocurrency and is gaining popularity as an investment tool across the globe and even creating the gossips like Bitcoin Trader This Morning. There was reported around 16.7 million bitcoins circulation until 7th December 2017 amounting to around $260 billion US dollars. However, with its value increasing steadily over time, there is always the threat of hackers stealing it. You may wonder how to keep bitcoin safe since it is not a government body regulated.
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Bitcoins are generally stored in a digital wallet, which can be web-based or hardware-based. The wallet may reside on your computer desktop, smartphone or by printing addresses on keys and private keys. There are some private keys present in every wallet without which you will not be able to access your currency. There are chances of your private key being stolen or lost. Without this key, you will never be able to get access to your bitcoins. Computer malfunctions such as hard drive crashes may also result in bitcoin loss. There are also reports of computer hacking or losing the device resulting in bitcoin loss.
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How to protect your bitcoin from hackers
- Backup: You need to take a regular backup of your bitcoin wallet. With regular backups, you will be able to recover the lost currency in your digital wallet. Backup wallet.dat files. Identify multiple secure locations to store them like CDs, hard drives and USB. Also, choose a strong password to increase backup security.
- Offline mode: It is also referred to as Cold Storage Wallet. Since it is not net-connected, it is safe from hackers. But accessing this wallet can be inconvenient. Hence, you are suggested to diversify the bitcoins in small amounts. Some you can store in the cold storage and others within your online digital wallet. The latter can be used to perform daily trading. Private keys in the cold storage can be in the offline mode, thereby doing away with theft. Some popular cold storage techniques include hardware wallets, storage devices such as USB drives, sound wallets and paper wallets.
- Encryption: With proper encryption, any folder, message or file can be provided with additional security. You need to use the right key to unlock it. You need to use a password to access your Bitcoin wallet. For hardware, mobile or desktop wallets, encryption plays a crucial role to protect your bitcoins from online theft and hackers. Password selected should be strong with special characters, numbers, capital and small letters. Thus, you will know how to keep bitcoin safe.
- Software: It is important to update your software regularly without fail. Non-updated bitcoin software will not be safe for your wallet as hackers can target it easily. You can ensure an enhanced security system by installing the wallet software’s latest system. Updated software comes with advanced security protocols and fixes. This can help avoid any major crisis. Constant updating your computer software, operating system and smartphone are sure to make the bitcoins much safer.
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- Multi-Signature: With time, this concept has gained popularity and involves some people around 3-5 providing transaction approval. This limits threat as the server or single controller will not be able to make transactions. This means, no one will be able to withdraw or send bitcoins anywhere. It is necessary to determine right at the beginning, who are likely to be the people to have this approval authority.
Following the above can help you to know how to protect your bitcoin from hackers and stop worrying.