With the constant fluctuation and uncertainty surrounding bitcoin combined with security risks (see the most recent hack claiming almost $70 million), investing in cryptocurrency may seem like a gamble to some. Luck appears to play an important role in whether or not individuals actually profit from bitcoin mining, but investing intelligently and securely is the most important strategy when starting out in order to maintain a secure investment.
Bitcoin “wallets” must be secured for your own safety. These contain the bitcoin key that you own, allowing you to access this online currency in specific locations. Wallets can come in a variety of digital forms, the most common being hardware, which can be connected to a desktop computer, smartphone, or tablet. Leaving your bitcoin public exposes you to the risk of being hacked or falling for phishing scams, so going this route is perhaps the safest.
Hardware wallets are often small enough to keep in a pocket or purse and connect via USB ports. They require PINs for added security, and often come with “seed” passwords should you forget the initial password. The only major downside of this security system is that if you lose the device, there is no real way to recover your bitcoin. However, you can backup the cryptocurrency on a separate hard drive to prevent this.
Paper wallets are the obvious alternative for those that feel safer with a physical product. These are quite literally pieces of paper distributed by the company that display your public and private key numbers used to access your bitcoin. This is a safer, smarter option for individuals who don’t plan on touching this digital currency for a long period of time. Just remember to keep this stored somewhere private and secure.
Always be wary of online security services. These are always at risk of security breaches, and as we’ve learned from the recent Equifax breach, no company, no matter how large, is safe. Insurance is not always offered through these providers as well; another risk that may not be worth taking.
Think of a bitcoin wallet as any other physical wallet used regularly. People don’t normally carry thousands of dollars in cash around in their pockets. Stick to keeping small amounts of bitcoins in your wallet, regardless of whether or not that is through a desktop, mobile device, or server. You can store the remaining digital currencies in an even more secure environment.
Always backup your investment as well. Should your computer fail, not preparing beforehand would be disastrous. This also eliminates the potential for human error. A backup provides a failsafe in events like these, but these should be encrypted as well. Even backups are prone to security breaches.