How to Store Bitcoin?

Following the surge in the price of Bitcoin, what has increased is the number of hacking events. Many investors have only entered the cryptocurrency market recently, without having complete knowledge of how the bitcoins can be kept secure. Taking advantage of this situation, hackers have come up with ingenious ways to hack into wallets.

The most common hack that is carried out in plain sight is rerouting tokens. The bitcoins sent to one wallet is made to get deposited in the address of another wallet while the transfer is in process.

The storage of bitcoin is designed in the same way as that of fiat currencies. Bitcoins are stored in a wallet but it is digital. Digital wallets come in two forms, web-based and hardware-based. The application of the wallet can be downloaded on mobile devices or on a computer desktop. In order to keep your bitcoins safe, you can print the private keys and addresses on paper.

• Hot Wallet

Hot wallets are those that have an online existence. Hot wallets only run on devices that can be connected to the internet, such as computers, smartphones, and tablets. As the private keys are distributed over the internet, these wallets are vulnerable to attacks. But people choose this form because it is convenient and can be accessed from anywhere.

Hot wallets are ideal for small amounts of bitcoin. Also, it is important to note that saving cryptocurrency in an exchange wallet is not the same as saving them in your personal wallet. Exchange wallets are the wallets provided by the exchange you are using. You will not be the only one holding the private key to this wallet.

• Cold Wallet

Cold wallets are considered the safest option to store bitcoin. This wallet does not store or reveal private keys over the internet. It is an offline form of storage. The private key and addresses are stored in a place that does not require an internet connection.

The most secure way to make use of offline wallets is via a paper wallet. Paper wallets can be generated off of certain websites. These websites provide you with both public and private keys that are printable on paper. As all the addresses and cookies are stored in that paper, it is the only key to access your bitcoins. To keep it is safe people even laminate the paper and store it in safety deposit boxes at their bank.

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A hardware wallet means storing the private keys on a USB drive. Unlike hot wallets, these cannot be affected by viruses that might be on one’s computer as they never come in contact with the internet or any vulnerable software. This is an open-source that allows the community to take control of its safety rather than a company declaring its safety.

It is the most secure way to store Bitcoin in cold wallets. Setting up cold wallets requires more knowledge but they are worth it.

Are digital wallets really safe? It depends on how well the user protects the wallet. They can only be accessed with a set of private keys. Even bitcoin owners cannot access their coins without the private keys. The biggest danger to the safety is if any user loses the private key or it gets stolen. You have to forget your bitcoins if the private keys are misplaced. There can also be other situations like computer malfunction, hacking, or losing the laptop which has a wallet installed, which can lead to the displacement of private keys.