Once You’ve Bought Bitcoin, Keeping It Secure Should Be a Top Priority

Bitcoin use is increasingly growing in middle- and lower-income countries, not only for investing but also for preserving savings, sending remittances, and serving as an appealing and reliable alternative to financial services, which can oftentimes be hard to access. While many services have been launched, making it more convenient for individuals new to crypto assets, this enhanced adoption rate comes with a downside, too: an increase in cyber-attacks. According to blockchain analysts, 2022 was the worst year when it comes to the total value of cryptocurrencies stolen, accounting for $3.8 billion, and while in 2023, theft reduced to $1.7 billion, hacks not only remained an issue, but they increased, posing a massive risk to cryptocurrency wallets.

While no method is 100% secure, it is still imperative to look for the best ways to store your funds safely and avoid losing your BTC. If you don’t know where to begin, read on as we will guide you through the different types of storage available and some security precautions you can take to protect your crypto.

What Are the Available Methods to Secure Your Bitcoin?

In general, you have two options when it comes to protecting your Bitcoin: storing it on an exchange or in a wallet. Most crypto transactions happen on a crypto exchange, which is typically accessible through a mobile app or a web browser, enabling users to get a specific token in exchange for a different crypto asset or a fiat currency. It’s worth noting that this approach has both advantages and disadvantages. Storing your crypto on a regulated and reputable exchange can be valuable, especially if you’ve just got into the industry and you don’t really know how it works. Furthermore, some platforms provide insurance against lost or stolen cryptocurrency, which can turn out to be helpful.

However, crypto security experts advise users to avoid keeping their Bitcoin holdings on such a platform because it means completely relinquishing control of private keys and trusting that an entity will take care of them for them—which can sometimes be very risky. Suppose the exchange folds or gets hacked; in such cases, it may not be possible to recover your holdings because the exchanges' policies are often limited.

With this in mind, it’s best to store your Bitcoin in a cold wallet, which provides better security as it isn’t connected to the Internet and, thus, makes it more challenging to be hacked. This type of wallet generally takes the form of a hardware device, such as a USB stick, costing between $50 and $200. Suppose your plan is to buy Bitcoin as a long-term investment; in this case, it’s a no-brainer to hold your private keys in a cold storage device – but keep in mind to check on it regularly and place it in a fire-proof safe box for extra security.

For maximum level of security, we recommend you combine the methods discussed previously. How can you do that? For instance, you can use a cold storage device to safeguard your private keys, and once you decide to use them, you can transfer them to a crypto exchange. When you complete the transactions, you can then move the keys back to the cold wallet.

4 Security Precautions to Avoid Losing Your Bitcoin

Software Updates

One of the best safety practices for your Bitcoin funds is to ensure your software is always up to date – if the wallet runs on non-updated software, this can make it susceptible to hackers. On the other hand, the latest software version will ensure that all fixes are in place, ensuring your bitcoins will not fall into the wrong hands.

Backup

It’s imperative to back up your bitcoin wallet frequently because this will be very helpful if you experience a computer failure, ensuring you will be able to recover your bitcoins. Include all the wallet.dat files and use multiple secure locations, such as a CD, a USB, and so on, to store the backup, and remember to create a robust password to encrypt the backup.

Seed Phrases

Seed phrases are randomly generated words that can be a master password for your Bitcoin wallet, enabling you to recover your keys if you no longer have access to storage devices or lose them. How do seed phrases work more specifically? Simply put, the encryption of your keys will generate a series of words that will allow you to access your wallet – in general, these words can be easily memorized compared to the 64-digital hexadecimal keys, and you can buy a titanium stamping kit in order to safeguard the seed phrase.

Multi-signature

The multi-signature concept has raised attention over time, but what is it all about? Simply put, it requires transaction approval from different people to occur, which helps limit the risk of theft because it’s impossible for a single server or controller to conduct transactions and withdraw bitcoins. Since the very beginning, it’s decided who will be the individuals to transact, and when one of these people decides to spend their bitcoins or send them, the others in the group must approve the transaction – this is known as a shared wallet, and although it can be incredibly helpful, it’s imperative to use it with caution. In other words, you should ensure that you know the other people you will be joining the wallet with and that they are trustworthy, so you won’t experience any trouble along the way.

Takeaway

Throughout your crypto journey, it’s essential to remember that your Bitcoins will always be as secure as your wallet, which is why you must be selective when picking a wallet – ideally, go for an option developed by a trustworthy organization with a proven track record. This is essential because cryptocurrencies aren’t losing their popularity with malicious actors who wouldn’t hesitate to steal your bitcoins. Remember that storing your Bitcoin keys is your responsibility and implement the security precautions that we discussed above to keep your funds out of bad actors’ reach.