How to Keep My Bitcoins Safe An Open Letter to New Bitcoiners

 

After months of hearing about Bitcoin, you’ve finally taken the plunge and gotten yourself a Bitcoin or two. Welcome to the club!

From my perspective, Bitcoin is a bet on the future in troubled times. There are a lot of ills in the world, and a lot of those ills are because of vested, entrenched interests. Bitcoin is a destructive technology that looks set to shake up the financial world. Claims that it’s going to overthrow banks and governments are probably overblown, but it almost certainly will change how banks and governments work and limit the control they have over us. Bitcoin as a disruptive innovation, along with a hundred others in the decentralization revolution that’s developing, is set to change the world.

Unfortunately, that’s not to say that Bitcoin is easy or safe. You’ve most likely read about the many bitcoin heist and hacks over the last couple of years. For a while there, it seemed like there was a report of some major theft ever couple of weeks. That pace has slowed down, which means that security is getting better, but it doesn’t mean you can take security for granted.

The difference between a bitcoin and a bank card is that if your bank card is stolen, you can call the credit card company, cancel the card, and likely get any fraudulent charges reversed. That’s one of the main selling points of banks they offer security.

They don’t protect you against all dangers though: You’ll pay high fees and interest, you’re exposed to poor credit ratings, you could have your accounts frozen or confiscated, and you’re liable to have your identity stolen. You would never just leave your card laying around, and your probably a little worried about card readers that might be able to read your card’s information even while it’s safe in your back pocket.

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Well, Bitcoin is a little bit the same and a little bit different. The way it’s different is that if your bitcoins are stolen, there is no number to call. They are gone and there’s no way to claw them back, unless they were stolen by a white hat hacker looking to help you out. Not likely. The way it’s the same is that you should always use good common sense with your bitcoins just like you do with your credit cards and banking information.

If you are Googling about Bitcoin security, it’s likely that by now you’ve read some fairly technical and scary sounding advice. There’s no need to be scared or put off by keeping your bitcoins safe, but you should think about just how safe you need o keep them.

For example, in your house, you probably have some pretty valuable things: TVs, jewelry, computers, checkbook, etc. You may have an alarm system connected to the police station, but statistically it’s more likely that you have regular door locks and maybe some motion sensor lights. Things that are more important to you, you may keep in a safe deposit box at the local bank.

It’s the same with Bitcoin. There are ways to keep them highly secure but that usually takes a lot of effort and some technical knowhow. If you have that kind of money to secure, it’s in your best interests to do the research to find out how to really lock things down. But, if you have only a few bitcoins, then some common sense precautions are probably good enough for you.

  • Don’t make yourself a target by bragging about your huge stash of Bitcoins. It’s great to let people know you’re into Bitcoin, and even better to spend them, but there’s no need to brag and make yourself a target. Besides, if you have that many to secure, then you should probably be doing the research to make sure they’re 100% secure.
  • Invest in some good antivirus software and keep it running. Having a couple of different types running, antivirus, anti-malware, etc., can give you peace of mind over the safety of not only your bitcoins, but of everything you do on the computer.
  • While you’re at it, consider getting a keyscrambler. This is software that scrambles the signals the keys on your keyboard make when you hit them and foil spyware that tries to read these to steal your passwords. It’s not likely that you’ll get infected by one of these, but it’s good security for everything you do on the computer.
  • Don’t keep all your bitcoins in the same place. Keep some on Blockchain.info (being sure to export your private keys), some on a wallet like Electrum on your hard drive, some on app on your smart phone, and/or some on a paper wallet. This way, if any of them get hacked, you won’t likely lose your full investment.
  • Learn what not to share: private keys can often be displayed as QR code which can be scanned in an instant to steal coins, as a TV reporter found out last year when he flashed a paper wallet, private keys and all, on TV. It took less than a minute for a white-hat hacker to steal the coins. This noble person then contacted the reporter to offer the coins back. They were finally donated to charity.
  • For every method of storing bitcoins you use, take some time to learn how to keep them safe. All of the wallets out there have tutorials about how to keep them safe. Follow their advice about how to back them up, encrypt them, etc.
  • Use long, unique, passwords that contain letters, numbers, and symbols. This can be a pain, but it’s one of the most common ways people get hacked. If you use your kids’ names and birthdays with the letters reverse as your password on all your social media, then someone can figure that out.

Again, being secure with Bitcoins does not necessarily mean that you have to keep an online and offline computer and be shuttling back and forth with a thumb drive, unless you want to. If you’re new to Bitcoin, the advice I’ve given you here is probably good enough to get you by until you get a lot more comfortable with the tech and with the currency. It may be that in the future you want to lock your bitcoins down more securely, and learning more is always a good thing. But don’t be afraid with ‘good enough’ security either.

By Mark Norton Editor@BitcoinWarrior.net

7/3/2014