Buying Bitcoin Safely - Safest Bitcoin Wallets
It should never stay at the exchange.
When you buy bitcoins, you should treat them as cash considering there is absolutely no financial authority or bank protecting your funds. You’ve probably heard about people losing lots of money due to their computer crashing, an exchange going down or wallet files accidentally being deleted. Once a bitcoin is gone, there isn’t another one there to replace it.
Before becoming a Bitcoin buyer, you need to have a storage plan in mind, whether short-term or long-term. This article will go over some of the safest means to store your coins after investing.
Opting for a Hardware Wallet
Hardware wallets come in a variety of configurations, but think about it as encrypted external storage with various security features. These wallets are intended to keep bitcoins for long-term cold storage and may only be extracted using a program and an authentication method. Multi-factor authentication is common for most of these wallets considering that not every security method is bulletproof.
It should be noted that a decent hardware wallet is quite expensive, especially those with more advanced capabilities. It is still a good investment if you plan on getting a large stash of crypto to hold for years to come. Some wallets support multiple currencies and forks, letting you consolidate in one device.
A Paper Wallet With Encryption
Paper wallets may be perceived as a security threat for someone buying Bitcoin Ireland considering that the keys are out in the open. All it takes is a burglar to steal and scan these sheets of paper to secure your bitcoin stash forever.
On the other hand, there are secure implementations of paper wallets that include wallet encryption so any random person can’t open it up. They key behind this is BIP38 encryption, which allows your private keys to be secured with a password.
Using your noggin, you may also obfuscate paper wallets so that nobody knows it’s even there. Considering that there are pieces of useless paper everywhere, you can hide a QR code within a fake magazine page, a book, a fake flier or a business card. Having multiple copies of your encrypted paper wallet in multiple places in hidden objects will mitigate the chance of them being stolen and spent.
A “Brain Wallet”
A brain wallet is a seemingly scary and complicated process to keep your coins without keeping something tangible, but it is the safest against theft. The idea is to create a seed phrase that consists of a set of words used to store the value of your keys. This combination of words is used to translate into your private and public keys to be used with a wallet application.
Memorization of this phrase is a matter of practice, and some are better at it than others. Once memorized, you can destroy the original copy and use the phrase from memory when you need to access your funds. If you don’t trust your memory, you may use a substitution cipher to hide the words in letters, books or emails (although this isn’t entirely sound).
No matter which storage method you choose, you should never entrust an online wallet to hold the majority of your wealth. This includes the biggest exchanges like Coinbase to popular mobile wallets. You never know when an exchange will “lose” your bitcoins like Mt. Gox and various other platforms have done in the past.
Once you buy bitcoin, it is advisable to transfer it over to one of the cold storage methods mentioned in the article or spend it right away. The beauty of Bitcoin is the power you have over your own money. At the same time, you also bear the burden of keeping them secure from thieves or technical mishaps.