Bitcoin prices peaked in the second half of 2017 but met with a drastic setback thereafter. However, 2019 saw a surge in Bitcoin prices once again, and, 2020 is expected to be a big year for the Bitcoin. What is interesting to note is that the number of hacking incidents has also gone up with an increase in prices. Many newcomers in the world of cryptocurrency investments are not aware of the techniques for keeping their Bitcoins secure, and hackers on their part, are coming up with newer and more sophisticated ways of stealing coins.
Is it necessary to store Bitcoins safely?
It has been seen that many investors have lost their Bitcoins earlier because they were ignorant of the risks and careless about storage. But, if you have a proper understanding of the possible risks, you can protect the crypto-coins from theft. So, knowing how to store Bitcoins is very important because the coins once lost cannot be retrieved.
- The best way for storing the Bitcoin securely is by using a hardware wallet, cold storage wallet or multi-signature wallet. The hardware wallet is a security-hardened device to store the Bitcoins and it generates wallet keys and transactions have to be signed. This wallet will contain the seed within its inner storage; it is designed to handle both digital and physical attacks. The device will sign transactions internally; it will then send only signed transactions to computers. Since the private key is kept isolated you will not need to worry about spending Bitcoins from an untrusted computer. The only drawback to this device is that it is a recognizable object that can be discovered, and it is costlier than a software wallet. Go through bitcoin era app review to know how bitcoin trading can be done through automated trading apps like the bitcoin era.
- The multi-signature wallet will have many private keys for shifting the Bitcoins, instead of only one key. This device is useful because there is no one point of failure; it can cater to multiple people who want to spend Bitcoins and may be used as a back-up. Since the keys are spread across different locations, it is very unlikely that malware will affect all the locations. Multi-signature wallets are less costly than hardware wallets and can be downloaded free of cost.
- Cold storage wallets will generate private keys and store them offline. Payments can be received online through a watch-only wallet. The unsigned transactions will be generated online and then transferred offline for their signing, after which the signed transactions are sent online to the Bitcoin network.
- Desktop wallets will not be linked to the Internet and are known as “cold storage” mediums. Online wallets can be accessed regardless of where you are located but desktop wallets can only be accessed via your computer. Your personal keys will be stored only in that device, making hacking less probable. If malware infects your computer, however, your Bitcoins may be stolen.
- Hot wallets are single-signature wallets having private keys that are stored on a mobile phone or computer. These wallets are ideally suited for day-to-day spending and smaller amounts.
- A paper wallet can be a comparatively secure way of storing Bitcoins but this demands a far better understanding of the working of digital currencies. Paper wallets can be easily stored as they will not occupy a lot of space and they guarantee complete anonymity.
- Services have now come up that are allowing investors to purchase physical Bitcoins. Such coins come with tamper-proof stickers, and to buy these, you will have to pay a premium price more than the Bitcoin value.