If you’ve used the internet over the past few years and have been paying even the slightest amount of attention, then you know of the utter explosion regarding cryptocurrencies, and Bitcoin in particular. What you might not be familiar with are the details surrounding these currencies, specifically regarding issues relating to safety in your long-term investments. Here, we’ll go over some of the key details which every user needs to know to help ensure their Bitcoins remain their own, as well as a primer for those just not interested in entering this ever-expanding marketplace.
Bitcoin and Blockchain – The Building Blocks
Bitcoin itself is not a new technology, first seeing its release on the 9th of January, 2009. Since then, this cryptocurrency has gone from underdog to powerhouse, with early adopters now rolling in virtual cash and traders making significant gains. The general idea behind the currency is that it can be used anonymously online, and subverts many of the pains and restrictions which occur when dealing with fiat currencies; for example, conversions and transference issues. Unfortunately, this anonymous nature means it is a prime target for less than reputable individuals who wish to steal what others have earned. As is always the case, those on the side of honesty have not taken this lightly, leading to a multitude of technologies such as Bitcoin wallets and improved blockchains to help keep investors safe.
Blockchain itself can come across as confusing but the core components are rather simple to understand. In simple terms, we can look at this is a form of online bookkeeping. As cryptocurrencies grow, are traded and used, this blockchain uses cryptography to grow, expanding and allowing the storing of reliable and relevant information. This is aided by the fact that blockchains exist over multiple encoded systems. This decentralization and multi-level encoding mean that intercepting this data, manipulating or stealing it, is an incredibly difficult task; thus, this component of cryptocurrencies are able to ensure some level of base safety. Still confused? Don’t worry, there are plenty of detailed articles out there that can help with breaking down the mystical blockchain, with more on its tamperproof nature. Once you wrap your head around the basics, this becomes quite understandable, so stick with it if you have a real interest in your own cryptocurrency trading.
Bitcoin Hardware Wallets – What and Why?
Cryptocurrency needs a place to be stored, just as with fiat currency. And, just like fiat currency, there are multiple choices, and not all of them are created equal. The most basic form of storage and the form which has lasted the longest is that of online storage. The issue here is the same as any degree of storing information online – you run the risk of data theft, and therefore coin theft. This is especially dangerous in the area of cryptocurrencies because of how unregulated and young the technology is, as hackers can place traps in many points in order to capture coins of legitimate users. In fact, some have actually set up online wallet stores with the only intent of eventual theft of user coins.
Hardware wallets are special in that they store the relevant coin information on an actual physical device. This device is then treated with its own password, alongside the encryption which helps secure the coin itself from unwanted interference. Even if your hardware wallet was stolen in real life, the thieves would have no way of gaining the coin which is inside, and some even come with recovery technology which sends out locational or other useful information when the hardware wallet detects an attempt at unauthorized access.
In this way, cryptocurrency hardware wallets are some of the best investments which owners and traders can use. While they still aren’t perfect, as eventual trades will have to usually go through the internet, they do mitigate the risks significantly.
How Else can I Keep Safe?
Protection when it comes to your cryptocurrency investments can be helped with a few simple tips. It is important to keep in mind that a lapse in any one of these areas is risky, so it best to cover as many bases as you can.
First up, the most basic step is to keep your computer or device virus and malware free. This seems a little obvious, but many people operate under the belief that, just because their device is acting fine, it is not infected, which is often not the case. An infected computer can, in some cases, be lying dormant and waiting for the right moment to strike. Because of this, an up-to-date antivirus and malware scanning program is a must. There are some great ones out there for free, like those from AVG and Malwarebytes, so be sure to check these out.
Secondly, always check reviews for both the websites you use and the users you trade with before doing business, whenever this is possible. One or two fantastic reviews with a new trader might sound too good to be true, which means it probably is. Find those websites and users whose advice has been proven over time, and use them as a basis to learn who to trust.
Avoid trading from public computers. Net Cafes are wonderful for many things but they can also be a prime target for people to install backdoor programs. While it is the duty of the workers there to ensure this doesn’t happen, there is always the possibility of gaps and faults at play. The same can be said for unsecured Wi-Fi, though the problem here is of a different extent, and can be mitigated through the security of your own device.
Finally, remember to use as many different passwords as you can, even though this can be incredibly annoying. You can also use mnemonic or word association to help you recall these passwords, if you have difficulty, or even consider keeping a shorthand list handy, encoded in a way which only you understand. Be sure to be thorough; you don’t want to make a mistake here.
It’s a lot to keep in mind or, at least, it seems that way at first. Once you have a little bit of experience in cryptocurrencies, what we have written here today will be as familiar as the back of your hand. Just be sure that you stay diligent, as laziness or lapses can really come back to hurt you. Keep your coins close, in a wallet you trust, and be wary with whom you trade, and you’ll be well on your way to an effective career in Bitcoin and cryptocurrencies. Stay safe, and happy trading.