How To Secure Your Bitcoin Wallet and Invest Responsibly?

So you have managed to purchase your bitcoin through some popular currency exchanges based on your country and respective currency. Great Job ! But hold on! Have you took the precautions to ensure you don’t loose your private key which ensures you never loose your digital currency purchased. Yes most of the exchanges has took security mechanism like secured user authentication and PIN etc.. which you can use to access your purchased coin, if you have done your transaction using their own mobile wallet, you would have experienced the same. But still you need to take more concrete measures, so that you never lose your hard earned money.

Bitcoin transactions claims to be secured by military grade cryptography. Nobody can charge you money or make a payment on your behalf, but you need to take some key measure as a responsible investor, to safeguard your valuable asset from any possible frauds or hack

How To Take Charge Of Your Digital Currency And Protect It ?

One of the most trusted and secure mechanism to store your digital assets are using the offline Wallets.They are also called alternatively as Cold Storage Wallets and is one of the most trusted mechanism with highest level of security for savings.

Here is how it works ?

It can be done in the following 2 ways-

1. Offline transaction signing

2. Hardware Wallet

A. Offline transaction signing-

It is recommended that you use two different computers one of which will be internet connected having the watching wallet for creating unsigned transactions, another one will be working offline which will actually hold the entire wallet and the digital asset stored in it. It will be used for all signed transactions. with this approach you can

1. Create any new transactions using online system and you can save it on USB key
2. Sign the transaction with the offline computer.
3. Send the signed transaction with the online computer.

With this mechanism one cannot withdraw any saved assets as the computer which is connected to the network cannot sign transactions and mitigates any chance of fraud transactions

Armory in one such tool that can be used to do offline transaction signature.

B. Hardware Wallet-

A hardware wallet is a special type of bitcoin wallet which stores the user’s private keys in a secure hardware device.source

These wallets has been found to be the most secured mechanism to store your bitcoin and also gives you the ease to transact. These are tiny little hardware devices(USB)that has been purely designed from the root to be a wallet and nothing else. No software can be installed on them, making them very secure against computer vulnerabilities and online thieves.

These wallet helps you backup you assets and so it is possible to recover your currency back in case of any fraud or mis-happening.

As per wiki- some of the prominent pros of using hardware wallets are:-

• private keys are often stored in a protected area of a microcontroller, and cannot be transferred out of the device in plaintext
• immune to computer viruses that steal from software wallets
• can be used securely and interactively, as opposed to a paper wallet which must be imported to software at some point
• much of the time, the software is open source, allowing a user to validate the entire operation of the device

Some of the popular Hardware Wallets are: As per wiki-

1. Pi Wallet — cold storage: The Pi-Wallet is a small computer with the Armory bitcoin client.Transactions are signed offline, then transferred on a USB stick via Sneakernet to an online system for broadcasting. Visit pi-wallet.com for more details
2. TREZOR: It is a secure bitcoin storage and a transaction signing tool. The private keys are generated by the device and never leave it thus they cannot be accessed by a malware.
3. Ledger HW.1 : It Is USB based Smartcard Hardware Wallet. It is typically used as a blind secure device for multi signature transactions — holding a set of derived private keys and signing transactions without requiring user confirmation.

Summary:

Yes you have some very strong wallets and storage strategy which you can employ to protect your wallet and assets but all these still doesn’t guarantees 100 % full-proof security. At the end it all boils down to how aware and responsible you are as a investor/user, if you are well informed and use this available tool to best possible use you can mitigate the risk to larger extent if not to 100%.

At the same time I feel:

Any investment which gives this pretty high returns with 20–30 % return in trade both in up & downside in a single day, with no certain trend which can be tracked, comes with high level of risk. Specially if it is not regulated as is the case with this bitcoin and other digital assets like ripples, litecoin, ether etc.This skyrocketing high valuation of bitcoin is not devoid of any possibility of speculations and yes you have to be prepared for any outcome which can come out of blue anytime. So if you have high risk appetite and a money to spare which will not impact you financially you can take that calculated risk, but do it at your own risk and as a responsible user. You have to own it either way.Ending with a sense of gratitude towards all you awesome readers who are my true source of inspiration and compels me to act & write…

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How To Secure Your Bitcoin Wallet and Invest Responsibly? was originally published in codeburst on Medium, where people are continuing the conversation by highlighting and responding to this story.