Bitcoin network uses cryptography and is based on blockchain technology which makes it nearly impossible to hack it. But still, there's always a risk of digital coins being hacked or stolen from wallets or in the crypto exchange. The bitcoin network is built on blockchain technology that doesn't store data at a particular central server and instead, the data is stored across a big network of computers. The computers work together, and there's a constant check and verification that goes on to check the legitimacy of transactions and other records. Because of a huge number of computers working together, it gets hard to hack a network.
A hacker is required to breach 51% of the server or network in order to obtain the information, which is nearly unfeasible. Since its inception, the entire bitcoin network hasn't been hacked, but still, there have been multiple instances where hack of wallets or exchanges have taken place, but no hacker has been able to hack the entire bitcoin network. This makes it clear that there are security risks when it comes to store or trade bitcoin. Start your trading journey with bitcoin by downloading the Bitcoin Pro mobile app.
How to store bitcoins, and what measures should be taken?
Bitcoins are stored in wallets digitally, also called as bitcoin wallets, and are traded through specially developed online marketplaces called as crypto exchanges. It isn’t difficult for hackers to steal the coins from user’s wallets as they use many creative methods. But the risk of hack or steal can be reduced by using the right security measures. One most important security measure is two-factor authentication which adds a layer of protection to your wallet and requires a PIN or other code to access and steal your bitcoins. Bitcoin investors need to take all necessary precautions in order to store and protect their coins.
Here, let’s learn some tips or steps through which bitcoin wallets can be protected that are as follows:
- Create a unique and strong password
It is imperative to choose a wallet to store your digital coins carefully, but along with it, it is essential to provide your wallet with a line of defence by using a unique, strong and random password. Never use simple or sensitive information in your password. Your password must contain capital and small letters, numerals, and special symbols.
It is advised to use a password that contains at least 16 characters. Use a random password and never write it down or store it somewhere but you must use a password that you can remember. Avoid using your personal information while creating a password, as hackers can easily crack these.
- Use two-factor authentication
Safeguard your digital wallet by enabling the feature of two-factor authentication as discussed above. This provides a security layer and will make the entire process easy for you. You can enable this feature by visiting the settings option and then setting up 2FA. Ensure to choose the option of "any amount of cryptocurrency" for your bitcoin transactions that provide more security.
- Never store your coins in exchanges.
Crypto exchanges are places from where you can buy/sell bitcoins and other digital coins. Once you have purchased bitcoin, exchanges provide you offer to store your coins in exchanges. Avoid making this mistake as the exchanges are more vulnerable to cyberattacks. The best advice is to remove your bitcoins from exchanges and store them in digital wallets. In 2010, there have been reports of Mt. Gox, a popular exchange, which was backed, and it was announced that the exchange had more than 850,000 bitcoins. There have been multiple other cases as well where popular exchanges were hacked.
- Store your money in offline digital wallets
The safest and secure way to store your digital coins is in digital wallets, and that too in offline or cold wallets. The cold wallets are the most secure option to store your cryptocurrencies as these aren't internet-connected. The offline wallets are less vulnerable to cyberattacks, but still, users must take proper security measures to protect their bitcoins.
The Bottom Line
Store your bitcoins in the safest wallet and use all preventive measures to secure your coins. Get to know all the tips mentioned above to protect your bitcoins.