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How to secure bitcoin: What are the best ways to keep it safe?

As bitcoin's value has steadily increased, so too have cyberattacks on cryptocurrency exchanges and wallets. Michael Cobb explains how to keep your bitcoin secure.

One of our employees asked me recently what the best way to secure bitcoin is. I had no idea. Do you have any advice on bitcoin security?

While there's no pressing need to rush into upgrading your payment system to accept bitcoins, it is worth monitoring its usage, particularly for a business with a big internet presence or one that sells digital products and services, such as online games or subscriptions.

Cryptocurrency is probably here to stay, and although some countries, such as China, have banned its use, many countries -- including the U.S. -- appear more relaxed about its existence. Some large organizations began accepting payment for products and services in bitcoins; however, recent fluctuations in the value of bitcoin led some companies, like Valve and Stripe, to drop support of the cryptocurrency.

Still, many companies continue to accept bitcoin and other forms of cryptocurrency. One benefit for merchants is that bitcoin transaction fees are typically lower than the 2% to 3% charged by credit card processors. A top benefit for customers paying with bitcoins is that they leave no data behind that can be used in identity theft.

How to secure bitcoin

In addition to financial benefits, there are several elements that secure bitcoin from theft. Cryptography controls the creation and transfer of a cryptocurrency, and the protocols underlying bitcoin have proven to be robust. Bitcoin's use of a distributed ledger known as blockchain gives owners a record of all their transactions that cannot be tampered with because there is no single point of failure.

However, this hasn't stopped attackers from exploiting vulnerabilities within bitcoin exchanges or wallets -- the software used for storing bitcoins on computers or smartphones. Bitcoin exchanges are not regulated by the government, and they generally do not provide enough insurance and security to be used to store money in the same way as a bank.

For example, the Mt. Gox and Flexcoin exchanges both shut down after hackers allegedly stole hundreds of thousands of bitcoins from them in separate attacks.

bitcoin currency

Not surprisingly, a study by Dell SecureWorks in 2014 showed that, as the value of a bitcoin rose, so did the number of viruses designed to steal bitcoins from wallets. That trend has continued this year; there have been several cyberattacks on exchanges and wallets as the price of bitcoin and other cryptocurrencies has skyrocketed in recent months. In addition, new threats like cryptomining malware attacks have also emerged.

Despite the increasing rate of cyberattacks, cryptocurrency wallets are still among the best ways to secure bitcoin. Ideally, wallet software should be installed on a bootable USB or a live CD to ensure that the operating system is virus free and doesn't cache, log or store wallet keys anywhere.

Users have to treat their software wallet the same way they would a real one, and best practice is to use two wallets, keeping only a small amount of bitcoins on a computer or mobile phone for everyday use, with the balance kept in a separate offline wallet. This safeguards the majority of a user's bitcoins from malware trying to intercept the password used to access a wallet or to find unencrypted wallet data in the device's RAM.

The offline wallet needs to be kept physically secure -- maybe even in a traditional bank vault -- as the loss or theft of a wallet means the permanent loss of the bitcoins it contains. A computer hard drive storing more than $4.6 million worth of bitcoins was thrown away and lost when the owner forgot it contained 7,500 bitcoins.

Offline or cold storage services are available, but note that they aren't regulated by the financial services industry. Additionally, if an offline wallet is encrypted, it is important to not forget the passphrase. Some experts prefer not to encrypt this type of wallet because, in the event of death, descendants would not be able to access their inheritance.

Keeping bitcoin secure

Regular backups of a bitcoin wallet are essential to protect against computer failure, theft and human error, but never store them online, especially if the backup is not encrypted. Finally, always use the latest version of bitcoin software, and use a password that is at least 16 characters long.

Although bitcoin is a purely digital currency, it can be kept secure in analog form. Paper wallets can be used to store bitcoins offline, which significantly decreases the chances of the cryptocurrency being stolen by hackers or computer viruses. Printing the contents of a wallet -- basically the private keys and their corresponding public keys -- creates a physical record which, of course, must be kept secure.

Keeping bitcoins secure is complex and time-consuming, but well worth the trouble for anyone with a reasonable amount of bitcoins. Bitcoin is more than a passing internet fad, and when dedicated hardware wallets appear on the market, they should provide a better balance between security and ease of use, possibly increasing the general acceptance and use of bitcoins and cryptocurrency for online transactions.

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Want to ask Michael Cobb a question about application security? Submit your questions now via email. (All questions are anonymous.)

This was last published in February 2018

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What are the best ways to keep bitcoin secure?
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This stuff is a little over my head, but I'm glad Michael took the time to demystify it. I'm a fan of crypto currency, but no, I don't hold any yet and will need to learn a LOT more before I put my finances into Bitcoin or other currency.
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Wasn't someone just hack for a lot of money? I can't remember the specifics but i though it was a few million dollars. I'm curious as to why a lot of retailers do not accept this form of currency. The flip side  to this, are the funds insured like banks in the US by the FDIC ? IT also make me wonder if this is circumventing tax laws as well ? 
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IQ option has really put me through a lot in a negative way but I’m thankful it’s all history now. The whole problem started when I invested $274,000 with them in 2018 and I was assured a very profitable income so I decided to join the trade by investing with such huge amount after a while I decided to make withdrawal to my bank but I just couldn’t and this got really made me restless and unsettled so I decided to contact a recovery expert and luckily for me I found a legit website where I got help with my recovery process cryptofundrecovery,com they are very reliable and legit, I was able to get my money from the unreliable company and smile came to my face again.

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As bitcon tops the $7,000 mark,  Many early bitcoin investors are in a painful predicament. They can't remember the complex security 

codes they originally created to gain access to their bitcoin wallet. Plus there is no way to reset the password if you forget. But 

there's is hope on the horizon. A illinois base fund recovery company ( Bitechrecovery.com) has recently begun helping people to 

recall forgotten passwords with also methods and strategies for funds recovery. They also offer wide range of services. Email: 

contact@bitechrecovery.com
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Times have changed. Technology is evolving and opportunity are coming on cryptocurrency everyday. There are experts across the globe who understands how to make profit fast on cryptocurrency luckily for me I was able to come across one few months ago and the result was overwhelmed. I contact him on his email digitalcurrency14 @gmailcom He explained the whole process to me and we both got a deal after the agreement. To my greatest surprised I made a lot of profit in few weeks which I wouldn't want to disclose here but I'm glad of his service 
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Bitcoin (BTC) is recognized as the world’s first truly digitalised digital currency (also known as a cryptocurrency). For a moment i gave it a thought as a starter;  investing in bitcoin will be a good idea for me , i took the risk despite the little cash  i was using to survive when i lost my job, i'm sure some people don't believe how true bitcoin mining saves lives and erase the poverty image away, I made a whooping profit of 35k with just 1000 US dollars within one week after I joined the best cryptocurrency investment team.As a starter I did not really have an idea of how to invest in bitcoin until i contacted this team after some good reviews i found on the web 
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Thanks to this team for helping from been scammed 
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To be honest I’ve been getting some info about bitcoin making people rich , yeah yeah 
I know how that sounds , sometimes you feel it’s scam but deep down, something keeps telling you to give it a try , I’ve been scammed before ,so annoying and me trying all my best to get my  bitcoins back, after even paying some incompetent hackers that are lazy 
But I’m happy now that I can prove to these lazy hackers that I got my bitcoin back from those loopholes with the help of these hardworking experts 
I’m happy I invested my bitcoin with this experts and I’m making a lot of money ,guess ,I’m getting $36k weekly , you think this is scam , I won’t be  saying if it’s not real , Invest your bitcoin with this team and get more knowledge about bitcoin with the help of this experts 
Thank you 

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To be honest I’ve been getting some info about bitcoin making people rich , yeah yeah 
I know how that sounds , sometimes you feel it’s scam but deep down, something keeps telling you to give it a try , I’ve been scammed before ,so annoying and me trying all my best to get my  bitcoins back, after even paying some incompetent hackers that are lazy 
But I’m happy now that I can prove to these lazy hackers that I got my bitcoin back from those loopholes with the help of these hardworking experts 
I’m happy I invested my bitcoin with this experts and I’m making a lot of money ,guess ,I’m getting $36k weekly , you think this is scam , I won’t be  saying if it’s not real , Invest your bitcoin with this team and get more knowledge about bitcoin with the help of this experts 
Thank you .

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