The cryptocurrency market is here to stay. Most countries have taken steps to allow their use under financial and tax laws and regulations, including the United States and the European Union. China remains cautious, however. Although they have not outright banned Bitcoins, many of these countries have imposed restrictions on its use due to concerns about price volatility and the potential for money laundering and illegal transactions.Is Bitcoin a safe investment?
It is possible to protect Bitcoin from theft in several ways. A cryptocurrency is created and transferred using encryption, and the protocols that underpin Bitcoin have proven to be secure. The blockchain technology used by Bitcoin provides owners with a record of all their transactions that cannot be manipulated since there is no single point of failure. As a result of Bitcoin’s DLT transparency, all transactions are available to the public, but individual participants remain anonymous, preventing the possibility of a data breach.
Although DLT and blockchain have many strengths, attackers have exploited vulnerabilities to steal Bitcoins and other cryptocurrencies from crypto-exchanges and crypto-wallets, which are the software used to store Bitcoin on computers and smartphones.
It is generally not possible to store money in crypto-exchanges and -wallets in a manner similar to a bank due to insufficient insurance and security. As Bitcoins have become more valuable, the number of viruses designed to steal Bitcoins from wallets, along with cyber attacks against exchanges, has increased. As a result of Bitcoin Mining or crypto mining malware attacks, also known as Cryptojacking, internet users’ devices are mined for cryptocurrencies with nothing but their power and resources.
Best practices for keeping Bitcoin secure
Even with the increasing number of cyber attacks, cryptocurrency wallets are becoming more secure and are still the best way to secure bitcoin. However, there are security concerns associated with each wallet option.
Two-factor authentication should be enabled on all computers and mobile devices running wallet software. Devices should be unlocked with a PIN or fingerprint recognition. All devices should be protected against malware, phishing attacks, and fake websites.
Software wallets do not require physical interactions to confirm transactions and always expose the keys. Hardware wallets require physical interaction to confirm transactions.
Bitcoin wallets of any type should be regularly backed up to protect against computer failure, theft, and human error. Especially if the backups are not encrypted, users should never store them online. Free and straightforward encryption tools like GnuPG and VeraCrypt are available. Keep the wallet software up to date and use a secure, complex password that is unique to each wallet and exchange. Moreover, be aware of Bitcoin and cryptocurrency scams so as not to be conned into exposing your keys.
To avoid being scammed, overcharged, or deprived of your money, carefully research any cryptocurrency service or software you intend to use. Transactions using Bitcoin are pseudonymous. Therefore, if someone knows when, where and how much a user spends, they may be able to discover the address of their wallet and track spending habits by looking at the Bitcoin ledger. These sorts of information are easier to gather from an individual’s browsing activities on the Internet, however.
The process of keeping Bitcoin secure takes some planning and effort, but it is no longer as complicated and time-consuming as it used to be. Everyone with a reasonable amount of Bitcoin should take the time to do this.
Cryptocurrencies like Bitcoin aren’t just a fad. Bitcoin and cryptocurrencies can be used for online transactions with dedicated hardware wallet and secure Bitcoin Wallet that balance security and ease of use.