The choice of Bitcoin wallet is the question of concern both for active Bitcoin users and those who just started to use cryptocurrency. We have already told you about the types of Bitcoin wallets in one of the previous articles.
Often choosing between different types of BTC-wallet, we have to choose between convenience and security. The latter factor is more important, so we will tell you how to get to know if your Bitcoin wallet is secure or not.
Firstly you should check whether you fulfill the rules listed below and whether your Bitcoin wallet meets the requirements.
Multi-SignatureThis is one of the relatively recent innovations that significantly prevents the theft of funds from Bitcoin wallets. Earlier every Bitcoin address had only one secret key, but now it has three of them. Since bitcoins belong to anyone who owns the private key, this key-multiplying is a pretty good idea. In fact, it looks like this: you enter the master password and the two cryptographic keys, and then the public keys are sent to people you trust (1-12 people), and they confirm or cancel the BTC-transaction.
You can choose which number of people (usually 1-4) should confirm the transaction. The most common way is 3:5, i.e. five people get the public keys, but it is enough only three confirmations for the successful transaction.
This process significantly reduces the risk of steeling someone’s bitcoins.
You should promptly update the software on your computer and make sure that there are no viruses. The security of your Bitcoin wallet depends on its environment, and the variety of malware pose a potential threat.
Location of the wallet providerEven if you choose an online Bitcoin wallet, pay attention not only to its features, but also to the geographic position of its creators.
After all, some governments are not particularly interested in the new technologies, leaving the use of Bitcoins at the discretion of people. While others are in constant search of schemes and methods for tracking Bitcoin transactions in order to impose taxes on them.
At the moment, to track each user's BTC-transaction is technically impossible, but it is likely that in the future some government may try to take control over the providers of Bitcoin wallets.
BackupMake sure that your Bitcoin wallet provider offer a service to backup your wallet. Besides it should be encrypted. Otherwise, if it gets any virus, you can loose your coins.
It is better to make several encrypted backups and to keep them separately. And do not forget to do it periodically.
Encryption of Bitcoin walletYou can encrypt your BTC-wallet using TrueCrypt program. In this case, if the data storage device containing your Bitcoin wallet will fall into the hands of a third party, they will see the notification "Disk is not formatted". But if they would see, for example, a RAR/ZIP file with password put into it, it would cause some concern.
Besides, this software allows you to keep together hidden and normal volumes. Let's say, you are forced to say the password of the TrueCrypt volume, you can indicate the password of the normal volume that does not contain any important information. Cold storage
Still the most secure method is to have your Bitcoin wallet on the PC without Internet connection. Here you can store the private keys without worrying that they may be stolen by hackers. In addition it is better not to store all your coins in one Bitcoin wallet. It is more secure to have a few Bitcoin wallets on the cold storage.
There is also an option to keep your Bitcoin wallet on two computers. The one that does not have an access to the Internet, keeps a full version of wallet, and it can confirm the BTC-transaction. A computer that has an access to the network should keep only "watching" part of the wallet which can not confirm the transfer of bitcoins.
Although desktop Bitcoin wallet is secure, do not sacrifice the convenience completely: mobile and online BTC-wallets can also be used. It is enough to keep the small amounts of coins there and to follow the rules of security.