Bitcoin is about giving you back the power over money. The power that Bitcoin gives you back has incredibly positive consequences for your life since it allows you to live on your own terms. However, you know that with great power comes great responsibility.
This is not me saying this, but Ben Parker, Spider-man’s uncle.
Ben Parker could have been a Bitcoiner. Indeed, Bitcoiners gain great power with their BTC. But to be able to take full advantage of it in the future, they must take responsibility for the security of their BTC. With the Bitcoin system, you alone are responsible for the fruits of your labor.
That means following a few basic rules to make sure you don’t make mistakes that you’ll regret forever. Here are 8 security tips I urge you to follow to protect your Bitcoin.
1. Setup 2-Factor Authentication on your accounts
In the vast majority of cases, you will be buying Bitcoin via exchange platforms. You will need to create accounts on these exchange platforms. Then, you will enter personal information to meet their KYC (Know Your Customer) policy requirements.
You will have identified yourself on these platforms with an email address.
Now let’s imagine that this email address was revealed in a massive Facebook personal data hack like the one just revealed in early 2021.
Hackers of all kinds could be tempted to gain access to your email address. Once they get access to your email, they could very well access your account on these trading platforms. Then, it would become easy to steal your BTC or to get your bank information.
To prevent this from happening, you should definitely enable 2-Factor Authentication (2FA) on your various accounts. This applies to all your accounts on web platforms, not just those on cryptocurrency trading platforms.
Avoid using 2-Factor Authentication based on sending an SMS. Indeed, phone numbers can be easily hacked now. It is safer to use a third-party authentication application installed on your smartphone such as Google Authenticator.
You can even go a step further by using the Universal 2nd Factor (U2F) method that was developed by Google and Yubico. This method relies on physical USB or NFC devices to allow you to log in after you enter your email and password.
2. Store your BTC on a cold storage
In the Bitcoin world, there is one golden rule that you absolutely must remember:
“Not your Keys, Not your Bitcoin.”
You only really own the BTC for which you have the private keys. As long as you don’t have the private keys to your BTC, you have nothing. You trust a third party to ensure the security of your BTC.
If this third party decides to take your BTC away from you for some arbitrary reason, you can’t do anything.
You should therefore leave BTC on exchange platforms as little as possible. Once your BTC purchases have been made, transfer your BTC safely to cold storage such as a hardware wallet.
Be careful never to lose your seed phrase which will allow you to recover access to your BTC if you lose or damage your hardware wallet.
3. Protect your privacy and anonymity
Transactions within the Bitcoin network are recorded in blocks within its Blockchain. The latter is permissionless and trustless. Anyone can read its content.
However, the transactions made are pseudonymous. This means that only addresses are displayed. Your identity is not directly registered within the Bitcoin Blockchain.
Here is an example of an address on the Bitcoin network:
As long as your address is not linked to your identity, your anonymity is preserved.
If one of your addresses on the Bitcoin network is associated with your identity, all your transactions can then be traced.
When you purchase Bitcoin via a trading platform such as Coinbase or Kraken, since you send these BTC on your hardware wallet, the platform has the ability to link your identity to that address on the Bitcoin network.
Bitcoin Blockchain analysis software can then deduce if the address belongs to a larger cluster of addresses you have. This can lead to uncovering how many BTC you own in total and all of your past transactions.
Companies that constantly analyze the Bitcoin Blockchain also store all kinds of information, such as IP addresses, for example, to try to deduce even more information.
You should always keep in mind that if you do not take specific precautions to protect your privacy on the Bitcoin network, you should assume that all your BTC transactions could potentially be associated with your identity sooner or later.
So I encourage you to make protecting your privacy and anonymity on the Bitcoin network a priority. For this, there are various solutions such as Wasabi or Samourai software wallets so that your identity cannot be linked to transactions on the network.
All the answers to your questions in this area can be found in this dedicated article: “Four Essential Questions on Bitcoin Privacy and Anonymity Answered”.
4. Never reveal how many BTC you own
As a big fan of the movie “Fight Club”, I wrote an article last year revealing the existence of a Bitcoin Club. I took the time to reveal the 8 founding rules of this Bitcoin Club.
Here are the first two:
- Rule #1: You Do Not Reveal What You Own in Bitcoin.
- Rule #2: You Do Not Reveal What You Own in Bitcoin.
This rule is repeated twice so that all Bitcoin Club members keep in mind that you should never reveal how many BTC you have.
This would simply put you in danger. People with bad intentions could try to steal the fruits of your labor, either virtually or even physically.
So be careful by applying these two golden rules to the letter.
5. Use multiple emails for different accounts
A good way to limit the consequences of a hack of your email account is to use several email accounts for your different accounts on cryptocurrency platforms.
Concerning passwords, you should use a password manager that will allow you to avoid using the same password on several different platforms.
Thus, the consequences of a hack will be more limited. This practice is valid even if you are not involved in the Bitcoin world.
6. Bookmark websites to prevent phishing
We can’t say it enough, but when you’re transacting in Bitcoin, or when you’re connecting to cryptocurrency platforms, you need to be wary of phishing like the plague.
Some viruses have been created that will come in and change the addresses on the Bitcoin network that you copy to your clipboard.
A good practice is to check and double-check the addresses you enter. Then, bookmark once and for all the sites of the platforms, you connect to. This way, you will be sure to reach the right site when you click on your bookmark.
This will better protect you from phishing. For the rest, the same practices, as usual, apply here. Never click on unknown links in emails, and never enter personal information that is requested by strangers.
7. Use a VPN
Companies have been created that constantly analyze the Bitcoin blockchain. They store a lot of information about what is happening on the network, such as the IP addresses of the entities involved. The goal is to be able to deduce as much information as possible about the parties involved in a Bitcoin transaction.
To protect yourself from this, you should never expose your IP address on the Internet. Use a VPN solution that will allow you to remain anonymous on the Internet.
Again, this advice goes beyond the Bitcoin world. But if you weren’t already doing it before, it’s becoming mandatory to do so now that you’re in charge of the security of your wealth.
8. Have a properly configured antivirus and firewall on your computer
The price of Bitcoin continues to rise. As a result, people with BTC are ideal victims for people with malicious intent to steal online.
Many malicious programs have been developed to change the addresses you save on your clipboard or to use your computer’s computing power to mine Bitcoin without you know it.
To protect yourself from these malicious programs, I advise you to properly configure your antivirus and firewall on your computer. This is one of the things you should do to protect the fruits of your labor.
Bitcoin gives you power over what you own. From then on, you can live your life on your own terms. This comes with a trade-off: it’s up to you to keep what you own in Bitcoin safe.
Nothing insurmountable, but there are a few good practices you should follow. In this article, I’ve outlined 8 security tips that you should follow no matter what. If you want to take full advantage safely of the Bitcoin revolution in the years to come, you’ll need to do just that.