In this week’s column of Bitcoin Basics we answer the important question of how to secure your bitcoins
If you have even a passing interest in following Bitcoin news, you’ve probably read about a number of Bitcoin scams and heard of major Bitcoin heists. Bitcoin is a generally safe currency, especially if you take the right steps, but unfortunately a good number of people fail to properly secure their Bitcoins. In this article we are going to show you five steps you can take to ensure your Bitcoins are well protected.
Step Number One: Choose A Super Strong Password for you wallet
Choose a strong password. No, you shouldn’t use the password you use for your Facebook account, or any other account for that matter. Ever notice how the headlines are filled with security breaches? Passwords are relatively easy to steal so make sure you never use the same password for your Bitcoins.
For this reason you should choose a strong and long password, preferably with symbols, numbers and letters. Also mix up caps and lower case. We recommend a string of random characters rather than actual words. You can also use certain software programs like 1password and Roboform to create and store passwords.
Step Number Two: Two Factor Authentication Is Better Than One
Let’s be honest, there is always a risk that someone will hack your password, no matter how strong it is, and how well you keep it a secret. Another way to protect yourself is to use two-factor identification, which will require you to put in an extra piece of information besides your password.
Having the program SMS a pin code to your phone and then requiring you to input that is one common example of two-factor identification. Such methods are great at protecting your wealth. Another option can be sending a verification email but it is strongly advised to separate the device you use to log into your account from the device you use to verify your login.
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Step Number Three: Back That Wallet Up!
Make sure you create a backup of your wallet. This will help you recover your wallet’s private keys in case your computer or other device gets stolen. You’ll also be able to protect yourself from hardware failures and other things. So no matter how strong your other security measures are, make sure you back your wallet up!
Step Number Four: Put Your Bitcoins In Cold Storage
You can take your entire Bitcoin stash offline, and if you have a large amount of Bitcoins that is exactly what you should do. You can create a paper wallet or put your wallet on a flash drive. And then you can lock up that wallet in a safe, or heck even a vault.
Point is, you should definitely consider taking your Bitcoins offline if you have a significant amount of your wealth in the currency.
Step Number Five: MultiSig
If you happen to be running a Bitcoin business, or are storing family wealth in Bitcoins, or anything else like that you should consider “MultiSig”. This basically means that two or more people must input their information in order to access the Bitcoin stash. MultiSig is a typical component used among Bitcoin businesses. You can watch Coinbase Founder Brian Armstrong discuss MultiSig protection for securing their cold storage in an interview on Kevin Rose’s Foundation Series.
For example, if you and three friends run a business, you could require that at least two members input their information in order to allow access. MultiSig won’t work for everyone in every situation, but under the right circumstances it can be a great choice.
This article was contributed to DCmagnates by Ofir Beigel from 99Bitcoins – an informational blog that helps you get stated with Bitcoin.