Is Bitcoin Safe: Know The Ins and Outs of Cryptocurrency
You must have heard about Bitcoin. But some of you are still unaware of what exactly it is. Since you are uninformed of the exact meaning and functionalities of Bitcoin, I am writing this post. Hope this will make you understand Bitcoin better. Will we also find the answer to the question is Bitcoin safe?
What exactly is Bitcoin?
Bitcoin is a digital payment system, in other terms cryptocurrency or virtual currency that enables peer to peer networking and transactions directly between users. Now you must be wondering whether these transactions would be safe or not. I will come to that point, but before that let me tell you how Bitcoin works.
How Bitcoin works?
Since Bitcoin is a digital currency, it is not assigned to any bank or government. Users can anonymously send money to anyone. The Bitcoins are generated by a competitive and decentralized process called mining. Bitcoin miners process transactions and secure the network by utilizing a specialized hardware and use new Bitcoins in exchange.
Bitcoin owners use it as physical gold coins which can be used to purchase goods and online services. You can even store them expecting their value will increase over the years. One can easily trade Bitcoins from one wallet to another.
How to trade Bitcoin?
To buy and sell Bitcoins, you need to use the medium called Coinbase. Coinbase is the popular way to buy and sell digital currencies, including Bitcoin. It makes it easier to convert your local currency into and out of Bitcoin, and a secure place to store it. So in this section, we will learn how to buy Bitcoin and store it securely in a wallet.
- Firstly, you need to sign up for Coinbase. You can also download the Coinbase app for Android and iOS.
- After signing up, connect your bank account by completing a few verification steps.
- After successfully connecting your bank account, you can start making your first purchase.
- Before buying, Coinbase will show the current exchange rate as it changes over time.
Is Bitcoin safe?
The biggest concern about Bitcoin has been whether it is safe or not. As this is a digital currency, it is stored in an electronic wallet. Bitcoin is one of the major digital assets which is currently valued 2500+ USD, and this is why it has been a major target for hackers and cybercriminals. In the previous year, hackers have deflated millions of dollars simply by using the user’s phone numbers. When the users connected the computer to the network, they could see the other users already logged in.
Also read: Top 10 Countries using Mobile Payment System
Last year, almost $72 million of Bitcoin currencies was stolen in the Bitfinex exchange platform in Hong Kong. The Bitcoins were stolen from users’ separate wallets and Bitfinex tracked down the hack. Without full security, the important fund transactions were signed off by Bitfinex’s security provider. Prior to that, in 2011, Mt. Gox (a Bitcoin exchange in Tokyo) declared that approximate 85,000 Bitcoins (approx. $450 million at that time) of customers and companies were likely to be stolen. Although the reason of this theft was unclear, it was considered as a security flaw.
Bitcoin contains its own security measures, but it is also significant to use a few manual tricks to safeguard your Bitcoin wallet. Since Bitcoin is a sensitive app, you should keep confidential information like passwords and private keys in a safe place. I won’t recommend storing them digitally, but you can also write them down in a safe place.
Cyber criminals keep their snooping eyes on your Bitcoin wallet and attempt to steal them when any security flaw is found. This is why it is important to take steps to safeguard your Bitcoins.
You can do this by,
- Encrypting your wallet: By using a strong password containing a combination of upper and lower case letters, numbers, and alphanumeric characters.
- Backing up your wallet: Back up your Bitcoin wallet and private keys.
- Using multiple signatures: To protect against thefts.
- Backup your wallet: Backup in different media like USB, pen drive, external hard drive, SD card, etc. Take regular backups.
- Up-to-date software: Use the latest version of the Bitcoin software to avail important updates and bug fixes.
- Creating cold storage: Storing Bitcoin offline using a paper wallet.
How Bitcoin benefits you?
Despite having so many merits and demerits, people still consider Bitcoin as the best cryptocurrency, and they find it appealing due to a variety of reasons. Because no bank controls Bitcoin, so they are free from any expenses or charges. Then one can trade or spent Bitcoin independently across all borders. Bitcoin does not place any limitation on its users. For technologists and economists, Bitcoin is considered as a huge step towards digitization.
Concerning transactions, Bitcoin benefit users with its low cost and high-speed functionality. It is completely global with the slightest flaws and limitations are applicable to it. It hardly takes 10 minutes for someone to transact funds, whether it is a low amount or extremely high. This is the reason why transferring money with Bitcoin is cheaper and instant compared to the other methods.
Bitcoin is a huge step towards the cashless economy. It is a fully legitimate and secure wallet, which concerns about your security and therefore, provides a high level of protection if correctly used.
Tools to secure your Bitcoin
I have mentioned the processes to safeguard your Bitcoins, however, there are a number of tools you should use to initiate those safe keeping processes. One should use the following tools to secure his/her Bitcoins:
- For strong passwords: Roboform, LastPass, 1Password.
- To encrypt Bitcoin wallet: Bitcoin Wallet, Coinbase, CoPay, MyCelium.
- For multi-signatures: Cancoin, CoPay, BitGo.
- For cold storage: Ledger Wallet, Bitcoin Paper Wallet, Trezor Hardware Wallet.
- Paper wallets: BitAddress, Bitcoin Paper Wallet, WalletGenerator.
There’s no doubt that Bitcoin is a secure program. But despite the past thefts and security flaws, we should also not entirely rely on it, and therefore take strong protection ourselves. This will add an extra layer of protection to your Bitcoin wallet, which will make it challenging for hackers to rob your money.