Bitcoin first gained popularity in August 2016 when its price jumped from approximately $572 to $4,765 within one year. Currently, the virtual currency is valued at over $11,225. One of the most vital aspects of investing in bitcoin storing it safely. Unlike traditional securities, bitcoins cannot be held at a bank or with your broker. They need to be safely held in ‘wallets’ typically used to store the digital assets. However, storing the bitcoins safely by selecting the right wallet requires an entirely different set of skills and knowledge. Here, we provide bitcoin wallet platforms and learn how to use them to securely store your bitcoins.
Different Types of Bitcoin Wallets
Broadly, bitcoins can be stored in two types of digital wallets: hot wallet or cold wallet. With the former, the transactions are typically faster, but additional security steps are pulled in place to keep the assets safe with the latter. It is important to understand in detail about the two before investing in any bitcoin wallet.
In case of a hot wallet, the bitcoin is stored by a trustworthy cryptocurrency provider in the cloud and accessed through a desktop browser or an app. When you purchase a bitcoin, every trading exchange you join will offer a free hot wallet that can be used to store the currency. However, users can also choose to transfer the bitcoin to any third-party hot wallet provider they deem reliable.
In simple words, a hot wallet is always connected to the internet and can be accessed at any time. These wallets include all cloud wallets, software wallets, and mobile and desktop wallets. The only downside to using hot wallets is that they aren’t considered as secure since the prospect of losing funds due to a hack is relatively high. For this reason, it is advisable to store only small amounts of crypto in online wallets, which is needed for making small payments or online shopping.
A cold wallet is a small, highly encrypted portable device that enables the users to download and carry their bitcoin. In terms of security, these wallets are considered much safer than hot wallets.
Cold wallets are not connected to the internet. Fortunately, you can still receive funds at any time without any hassle. They can be in the form of hardware wallets, paper wallets, USB or other data storage devices, and even physical items such as physical bitcoins. They are more expensive than hot wallets and may cost as much as $100.
Ways to Store Your Bitcoins in Wallets Securely
If you want to ensure your investment’s security, here are a few tips to keep in mind. Check it out!
Use a cold wallet
This is one of the best ways to manage your cryptocurrency. If you have made a heavy investment in bitcoins, you must opt for a paper wallet or a hardware storage device to ensure that your investment is safe from hackers.
Create a wallet backup
Whatever wallet you are using, it is crucial to create a backup of the same and securely store it offline. With a backup, you will be able to restore access to your bitcoin wallet, in case it has been stolen, lost, or damaged. If you don’t have a backup, your investment will simply be lost in the aforementioned scenarios.
Use a secure Wi-Fi connection
If you are using an online wallet, make sure to never connect to it using a public Wi-Fi. Even if you think you are in a safe place, make sure to leverage strong encryption such as WPA-2 protocol.
Adhere to basic cybersecurity measures
To keep your investment safe from malicious activities, you must adhere to the basic cybersecurity practices. This includes downloading a robust anti-virus software, avoiding unprotected URLs, and not clicking on any attachments or links sent by unidentified senders.
Use multiple signatures
Using multiple signatures is a surefire way to secure your investment. This includes taking approval from a couple of people for any transaction to take place. This limits theft to a great extent.
Keeping your bitcoin investment safe and secure is an important skill to master. Following these simple guidelines is a must to avoid cyber threats and preventing malicious activities on your account.