As bitcoin establishes itself as the digital equivalent of paper currency, it becomes all the more imperative to know about how this digital currency can be safely stored.
Just like a physical wallet stores the fiat (cash) currency, bitcoin is stored in digital bitcoin wallets.
Bitcoin wallets offer an incredible incentive to store the currency in an online or an offline mode as per the security needs of the users.
Online wallets give one the freedom to make bitcoin transactions on the go, and from any handy device. You need to know that these web-based wallets store the private keys for you. In your account you see your balance but they own the private keys – this is getting safer and safer, but like this storing your money online you could be open to losing bitcoins if their website gets hacked for example.
However the ability to have your bitcoin online, to move, or spend as you need it very quickly is a real advantage of getting involved with the currency.
But there are still steps you can take to further secure them yourself – such as enabling 2 factor authentication (available on all reputable online wallets) where you enter your password and then receive a text to your mobile phone with a 2nd code.
Services like Coinbase are also now offering an online vault with even deeper layers of security, and also offering insurance for your bitcoin.
Further steps to to secure your online wallet.
Other ways in which one can make one’s wallet more protected includes encrypting it with a strong password and backing up the wallet. Blockchain.info is a leading website which provides its user with such a technology. Its users can protect their wallets using the industry-best AES encryption against cyber thefts and attacks. Blockchain’s encryption technology works in the user’s web browser before it is saved on the website’s servers, thereby eliminating the chance of the company misusing one’s bitcoin wallet.
Though it would be unfair to say that these measures would make the wallet impervious for an infinite amount of time, but it would be wise to put up a shield than taking cyber attacks head-on.
In case the thought of storing the digital currency online scares you, you can opt for cold storage. This option stores the private keys offline and safeguards one against any online hacking attempt. If you have a considerable amount of bitcoins, cold storage is recommended.
We go more into detail about this in our next article; how to make a bitcoin paper wallet.
Safest Online Wallets
- Coinbase -The USA’s largest and most trusted exchange. They also offer $5 in free bitcoin when you join, and have a lot of security features – they are generally seen as the market leaders in functionality and ease of storage and buying bitcoins.
- Xapo – The first service to offer really solid online “VAULT” this goes deeper and offers more layers of encryption and authentication – especially when you come to move or withdraw your bitcoin. * They also offer a debit card! You can top-up your debit card using your bitcoin, and spend it in $s in retailers around the world. They give 50 bits free when you join INSTANTLY, and a further 100 bits if you share on twitter and facebook
- Bitfinex – A really solid exchange with strong security options – they also offer the option to margin trade your bitcoin, or to LEND your bitcoin out for daily interest!