Compromises of Bitcoin exchanges such as Mt. Gox, which took place in early 2014 and the Bitstamp compromise which resulted in the loss of around 18,000-19,000 bitcoins has not gone down well with the users. We know that Bitcoin is completely anonymous and at the same time it is very transparent due to the Blockchain. Hence it is very difficult to get back the bitcoins that were stolen.
This calls for strong measures to be taken by the users of bitcoin to secure their wallets. Why? A recent research has revealed that a majority of the malware nowadays contain bitcoin stealing capabilities. In fact, there are nearly 150 breeds of malware whose sole purpose is to steal Bitcoins. All of this calls for a strong measure to secure your bitcoins. Here a few basic but vital tips.
How to make your wallet secure?
1. Use multi signature wallets
This makes it very difficult for the black hat hackers to have the ability of sending your bitcoins to their addresses. For example, a wallet has a total number of keys, say “x” and you need to sign “y” number of keys to sign a transaction and approve it. Only when “y” number of keys is signed, the transaction will be executed. This method is very useful especially for companies and for people who are the co-founders, or have a large leadership in your organization.
You can form a group who will perform the financial transactions and every time a transaction has to be executed, all the members of the group will have to sign the transaction. Hence, the hacker needs to obtain access to each employees computer/device to be able to steal the bitcoins, otherwise they will be safe.
2. Encrypt your wallet
This will prove to be yet another hurdle for the hacker in case he is able to illegally access your wallet. Make sure your password is long enough and it contains uppercase and lowercase characters. In addition to this, you should also consider using a password generator.
3. Use a strong password and a keystroke scrambler
This will make it pretty difficult for hackers to gain access to your wallet but you should also be sure that you install a keystroke scrambler because if your computer gets infected by a remote administration tool or a keylogger, your keystrokes can easily be logged and the hacker can gain access to your wallet. Hence, it is necessary to install a keystroke scrambler on your computer.
4. Regular Backups
Make it a habit to maintain regular backups in various locations and don’t forget to make sure that the location is secure. If you store the backups online, please make sure that the backups are encrypted.
5. Cold Storage
In simple terms, cold storage means storing your bitcoins offline, which means that your bitcoins will be stored on a computer which is not connected to the internet. This will prevent your wallet from being compromised, which usually happens due to the internet(RAT’s, keyloggers etc). There are many methods to implement cold storage such as using Armory(wallet client) on a computer that is not connected to the internet or using hardware wallets such as trezor, which costs $119. You can also use paper wallets but they must be handled with utmost safety.
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