How Can I Keep My Bitcoin Safe?

Last updated on 01/14/2019

When it comes to Bitcoin, security concerns are different than those for fiat currency. For one thing, bitcoin is strictly digital, and the ownership of bitcoin comes from the control over a wallet’s private key.

With that in mind, here are some best practices that can help keep your bitcoin safe.

Bitcoin Wallets

The short answer to the question of how to keep bitcoin safe is through a bitcoin wallet. There are many different types of wallet solutions, each suited for different types of cryptocurrency users, but, in essence, they protect a user’s “private key” and, by extension, their ability to spend bitcoin.

Private and Public Keys

Every Bitcoin address has both a “public” and a “private” key. Public keys are used as addresses, which bitcoin are sent to every time a transaction occurs. Exposing your public keys will not grant anyone access to your bitcoin; it will just provide an address where bitcoin can be sent.

A private key, however, is the code that allows users to send bitcoin out of a wallet. That is why it’s important to keep this string of numbers and letters secure using a properly vetted wallet solution.

And there are plenty of other security practices for bitcoin as well.

Back Up Your Keys

These days, many cryptocurrency wallet solutions ask or require their users to back up their private keys using a series of words or phrases, for example. It’s critical that bitcoin holders do not skip this option, as it will allow them to access their bitcoin in the event that their wallet is lost or stolen.

Don’t Keep Your Bitcoin on an Exchange

Many new investors tend to keep their bitcoin directly on the exchange after they purchased it. This is never a good idea, as many bitcoin hacks and thefts have taken place directly on these exchanges. Exchanges are usually centralized, meaning there is a single point of failure that can be attacked.

Consider Multisignature Wallets

Some bitcoin wallets utilize what is called a “multisignature” or “multisig” feature that allows them to secure their bitcoin using multiple keys. This may improve security for those who wish to join their holdings with another trusted party.